According to a study by the Florida Atlantic University College of Business, the US housing market is overheated with downward pressure on housing prices being seen on a national basis. While we aren’t seeing as many price increases, there’s only a slight weakness in demand. Notable real estate economist and author Ken Johnson PhD notes that “all evidence is suggesting that the national housing market is peaking. However, this time around from a national perspective things should turn out quite differently than 2006.”
Johnson determined that housing prices are currently 7.3% above their long-term pricing trend with minimal downward pressure on the demand for homeownership. Contrast this with the mid-2006 peak where prices were 31% above their long-term pricing trend.
In other words, we can expect flatter housing growth. At worst, we could experience price declines slightly below the long-term pricing trend.
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