NC State Economist Dr. Mike Walden – Cautions on the Housing Rebound
Most of the news on the housing market has been good recently, with sales, prices and new construction all moving in a positive direction. But, as N.C. State University economist Mike Walden tells his co-host, Mary Walden, some experts are having second thoughts.
“Well, these experts are not predicting another housing crash, but they are saying, ‘Hey, let’s be a little cautious here. Let’s not expect the housing market necessarily to be roaring ahead – certainly nothing like what we had in the early 2000s.’
“And they point to a couple of factors that they think are different this time: Number one, credit is likely to remain permanently tighter they think. We’re not going to go back to those lax credit days of the 2000s. Particularly if you’re a new buyer, you’re going to have to meet higher standards in order to get credit to buy a house. That’s going to keep housing sales at a somewhat lower level.
“So, secondly, and this, I think, is very much new, many of the new younger buyers now looking to buy a house are coming with large student loan debt. We didn’t use to see that before. When you and I bought our first house, Mary, we didn’t have student loan debt. And that’s also going to lower the value of houses that those folks, those young people can buy and maybe even put off for several years whether they can actually buy a house. And then lastly the experts say that if you look at who has buying homes recently and driving up housing prices, a lot of it is being generated by investors who are buying homes and renting them out, or buying homes, making some changes, and then flipping them for sale. And these experts say, ‘That’s all well and good, but really for a sustained movement in the housing market, positive movement, you need homes being bought by primary residents.’”