NC State Economist Dr. Mike Walden – What to Expect in Housing
It looks like the housing market is finally turning around, with both sales and prices on the upswing. Does this mean we’re headed toward another housing boom? N.C. State University economist Mike Walden responds.
“Of course, what people worry about is the housing boom that we had from 1997 to 2006, which made a lot of money for a lot of homeowners. But on the other hand, they lost a lot of it when we had the housing crash.
So people are worried about the boom turning into a bust. But I don’t think we’re in that territory right now. Now, we are seeing housing prices go up fairly significantly – seven, maybe in some markets, 10 or more percent on an annualized basis.
But you have to remember this is from a very low base. The average house lost a third of its value from 2006 to 2011. But also we’re not seeing big gains in supply right now. Obviously during the housing bust, we didn’t have a lot of building going on, and we lost a lot of builders. We lost a lot of construction workers, and we’ve not gotten those folks back. So right now, we’re sort of in the sweet spot, if you will, for prices.
We have people getting back in the market to buy, and we don’t have a lot of additional supply. Now, that supply will come back. We will start to see more building. We will start to see more houses on the market for sale. And I think eventually what we’re going to end up with is housing prices going up at the traditional three to four percent a year.”