Ten years removed from the great recession, home prices are the up and alarm bells are being rung in certain hot markets.
In particular, four of the country’s largest cities are seeing price growth that’s being viewed as unsustainable: Washington DC, Miami, Houston, and Denver.
"With no end to the escalation in sight, affordability is rapidly deteriorating nationally," Frank Martell, president and CEO of CoreLogic, said. "While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge."
According to Core Logic’s most recent report, the four aforementioned cities comprise 40% of the country’s largest markets.
That has some industry players worried that a correction might be in the offing.
However, one veteran who specializes in fix-and-flip mortgages argues that segment will benefit if and when home prices correct.
“I think we’ll start to see … some correction in market prices. They’re at an all-time high in many markets around the country so I think eventually (they will come down). Real estate is a cyclical market and we’ve had a nice long run. It’s been a good decade. The last real correction, and it was significant; I don’t think we’re going to see anything nearly as severe. But I think we’ll start to see corrections, geographically. It won’t happen across the country at one time,” Robert Greenberg, CMO of Patch of Land, told Mortgage Professional America. “I think we’re really well positioned.
“A correction will help the market as a whole and I think it will be good for the (fix and flip market) which is something you wouldn’t hear a lot of lenders or originators say. It’s not something people want to think about.”
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Real estate is at a ten year high, according to one veteran, and set for a slight correction. This one mortgage segment will benefit, though.