He believes slack income growth will put pressure on housing prices in the next couple years.
“We do not see income growing fast enough to keep up with the past few years of rapid increases in home prices,” Flanagan wrote, according to Bloomberg.
Until then, Flanagan believes housing prices will increase 3.7 per cent in 2015 and 0.8 per cent in 2016.
However, those gains will be off set, if Flanagan is to be believed, by a 1.7 per cent decline in home values in 2017, followed by further declines in 2018 (-2.1 per cent) and 2019 (0.8 per cent), respectively.
So originators can expect higher commissions in the next few years before lower prices bring them down slightly.
According to the S&P/Case-Schiller U.S. National Home Price Index, housing prices have increased 25 per cent in the last few years. They still hover almost 8 per cent below peak values pre-recession.
This month has seen a 0.8 per cent increase over early May’s values.
A more recent snapshot proves that housing markets are fairly balanced – for the time being at least, according to recently released statistics from RealtyTrac.
“Nationwide, in April single family homes and condos sold for almost exactly 100 percent of their estimated full market value on average — indicating a good balance between supply from sellers and demand from buyers,” said Daren Blomquist, vice president at RealtyTrac in a recent release.
The median home price in April was $171,700, according to RealtyTrac – a two per cent year-over-year price increase.
By Justin Da Rosa
Chris Flanagan, a Bank of America analyst published a report earlier this week that predicts the U.S. housing market will experience three straight years of “modest” decline starting in 2017.