Most real estate experts believe the housing market is recovering. But three contrarian economists are not so sure.
Keith Jurow, a real estate analyst and author of the Capital Preservation Real Estate Report, fears the housing “recovery” is over.
“After more than a year of bumping along the so-called housing recovery, pundits are beginning to show signs of worry,” writes Jurow. “Existing home sales are weakening, new home sales are dismal, and even the Case-Shiller index is showing signs that prices are leveling off.”
Jurow: Death of the Trade-Up Market
Jurow argues that weak sales, soaring listings (inventory) and the lack of trade-up buyers are stifling the residential real estate market.
“I urge you not to listen to pundits and Wall Street economists who continue to insist that we are on the path to housing recovery,” he writes. “If you follow them, you and your clients will make major investment mistakes that will cost you plenty.”
Sanders: Stagnant Job Growth and Income Hurts Housing
Anthony B. Sanders, a professor of real estate finance at George Mason University, argues in his Confounded Interest blog that falling wages and income stagnation is hurting the U.S. real estate market. While existing home prices rose 8.10 percent in June, Sanders claims that wages grew a dismal 2 percent.
“It is a fun time for wealthy investors (domestic and foreign) who can purchase homes with all-cash,” writes Sanders.
Whalen: Bracing for a Slowdown
Christopher Whalen, author of “Inflated,” believes there are still too many underwater borrowers who are holding back real estate sales. There are 9.1 million seriously underwater borrowers.
“There’s a supply squeeze,” Whalen tells Bloomberg, arguing that many underwater borrowers are unable — or unwilling — to sell. “That’s what’s really driven home prices up. Because volumes are low. If you compare them to pre-crisis levels, sales are very anemic.
“Why haven’t we seen the demand?” Whalen continued? “Two reasons: Jobs and flat-to-down consumer income. Those are the two big divers of housing.”
Real estate is a seasonal business. As the summer ends, and we head into the slow winter months, will U.S. housing flounder or will the “recovery” continue?
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