Housing market at a regulatory crossroads

With home prices and sales continuing to rise across Southwest Florida, the state and the country, the real estate market appears set for a sunny future.

The talk in some quarters, though, brings up worries that another housing bubble could be developing, conceivably bursting into a runaway fire that scorches the economy again.

As unlikely as that is, some powerful political and business interests are bent on repealing some of the regulations on the financial sector that were adopted in the midst of widespread abuses in the banking and investment markets that beget the Great Recession.

September’s report by property data aggregator CoreLogic once again reflects a steady climb in housing prices. August figures compared with the same month last year show the national increase at 6.9 percent, Florida at 6.2 percent and Sarasota-Manatee at 3.9 percent. CoreLogic projects Florida’s home values will increase 6.6 percent over the next 12 months as the country’s rate rises by 4.7 percent. The company’s chief economist, Frank Nothaft, said that during the past three years, CoreLogic’s national index shows annual price growth from 5 percent to 7 percent. Home values in Florida still stand at 18 percent below pre-recession peaks.

One potential sign of trouble in the report is CoreLogic’s analysis of the country’s 100 largest metropolitan areas: 34 percent have overvalued housing stock as of August 2017. Of the 50 largest, 46 percent have an overvalued housing stock. The analysis defines “an overvalued housing market as one in which home prices are at least 10 percent higher than the long-term, sustainable level … .”

The histories of the savings and loan crisis of the early 1990s and the Great Recession should serve as lessons in disaster prevention, not a road map to replay. The similarities between the causes of the S&L crisis and the financial crisis of 2007–2008 and the U.S. subprime mortgage crisis of 2007–2009 should not be startling, but demonstrate that we do indeed repeat history.

To learn more about the current state of the real estate market in SWFL, contact an expert member of the 9 Core Realty team.

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