News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
No, it’s not another housing bubble
Ryan Chittum / Columbia Journalism Review / May 30, 2013
Hysteria in pockets of the press over a long-awaited recovery
The top story in all the major papers on Wednesday was news that home prices jumped 11 percent in the first quarter from a year ago, further confirmation that the housing recovery is underway in earnest.
The double-digit home-price increases and return of bidding wars have led to an awful lot of “bubble” talk lately.
Gawker declared yesterday that “The Next Housing Bubble Is About To Pop All Over You.” Gawker doesn’t quite grasp that soaring prices in Silicon Valley and San Francisco are being driven by a flood of newly minted tech millionaires chasing after a constrained supply of higher-end homes, and that’s not a bubble. Bay Area transactions are still 16 percent below average levels over the last 25 years and half the level seen at the peak in the mid-2000s. Prices would have to skyrocket, as we’ll see below, to get back to peak levels.
Yahoo Finance also declared last week that “The Housing Market Gets Bubbly Again” in a confused piece largely based on one anecdote involving the author, who buries a second anecdote that contradicts his thesis.
Bloomberg headlined a story two weeks ago, “From Brooklyn to California, Housing Bubble Threat Grows.”
Bloomberg’s first anecdotal evidence of the bubble threat? “An open house for a five-bedroom brownstone in Brooklyn, New York, priced at $949,000 drew 300 visitors and brought in 50 offers.”
A five-bedroom brownstone in Brooklyn for under a million bucks—and it only drew 50 offers?
Its second anecdote is about an all-cash deal for a $2 million house in Menlo Park, aka Facebook headquarters.