Future Price Correction

from CAR


 

 

Low risk of a U.S. housing correction
Source: CNBC

Sales and prices are moving so quickly that appraisals are not keeping up. If the appraisal doesn't match the contract price, the buyer doesn't get the mortgage, and the deal dies.

New research from JPMorgan examining historic data found that the risk of a dramatic decline in prices is low, despite current fears of a correction in the U.S. and Canada.

Using data from 14 developed countries dating back to 1950, JPMorgan's research found that sharp price corrections have been relatively uncommon, even following large price increases.

"The data show that sustained increases in real house prices have been the norm rather than the exception in the post-World War II era, as rising populations and incomes have pushed up land prices," Jesse Edgerton, U.S. analyst from the investment bank's economic and policy research team, said in the report entitled "Quantifying housing correction risk in Canada and the U.S." 

The research comes as fears grow over a housing bubble forming in the West, particularly in countries like the U.S., Canada and Australia. Since the beginning of the global housing boom around the year 2000, real U.S. housing prices are up 29 percent and Canadian prices up 138 percent, Edgerton noted.

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Sunil Sethi Real Estate

Sunil Sethi / REALTOR, Broker, MBA, CPA(inactive), GREEN

Sunil Sethi Real Estate 
www.sunilsethi.com

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