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No Sign of Slowdown

By nearly every measure, U.S. home prices are on fire.

(Mountain Lakes, NJ, August 24, 2017) — Defying historical norms, U.S. home prices have grown far faster than wages in recent years.

It’s a trend that troubles Lawrence Yun, chief economist of the National Association of Realtors. He has been fretting publicly that the housing market has entered some sort of illogical zone of appreciation, one where home prices consistently post 8 percent annual appreciation while American workers’ salaries rise by just 2 percent a year.

"At some point, one has to wonder, can this continue, where home values consistently outpace people’s income?" Yun asked during a presentation to the National Association of Real Estate Editors conference in June. "Certainly, it cannot continue forever. For anything to rise four times as fast as people’s incomes is not sustainable."

Also troubling is the sense that today’s housing market is growing more unequal. For decades, the U.S. housing market was seen as an instrument of upward mobility. In the post-crash years, however, the housing market has exacerbated the economy’s growing wealth inequality.

With home prices at or near record highs in many cities, the biggest benefits are accruing to the wealthy, housing economists say.

More on the state of the housing market, plus insights into industry disrupters and a new threat from Zillow appear in the August issue of Real Estate Broker’s Insider newsletter.

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