Some housing experts believe that the housing market isn’t heading toward another bubble it’s still feeling the effect of the last one. As opposed to an oversupply of homes, they stress that not enough homes are being built, which is pushing prices up to levels that exclude many Americans from home-ownership.
No bubble with under-supply of homes
“We are under-housed,” says Zillow senior economist Aaron Terrazas.
Among other things, the home shortage is aggravated by low unemployment, which is making it {difficult to|tough to} hire construction workers, and not-in-my-backyard zoning rules exacerbate the problem of an already small pool of construction-ready lots.
Tight supply and a subsequent increase in home prices are making home-ownership unattainable in some cities, like Manhattan, where the median condo price has hit about $1 million. Even outside of the United States, there has not been much speculative building, says UBS Global Wealth Management’s Jonathan Woloshin.
“Nobody asked the question back during the bubble, ‘What would happen if prices went down?'” Woloshin says. “Better questions are being asked today.”
Dangerous practices like no-documentation loans have been ended through tighter regulation, making it more difficult for individuals to buy houses. However, only 1% of lenders surveyed recently by Fannie Mae blamed tight standards for credit and underwriting for the weakness in sales – 48% cited “insufficient supply.”
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