The re-inflation of the US housing bubble is proceeding apace, thanks in no small part to the unprecedented level of previous support from the Federal Reserve. Zillow Research, a real estate industry group, announced recently the total value of all US homes came to $31.8 trillion at the end of 2017.
The 6.5 percent inflation rate for that market last year was the fastest rate of increase seen in the last four years. With those current valuations, then, the American housing bubble has reinflated by $9 trillion since the Great Depression 2.0 bottomed out, according to other industry calculations.
Put on your parachute, because the boom is expected to continue through 2018. CoreLogic, another industry group, forecasts that home prices will increase by 4.2 percent on a year-over-year basis from November 2017 to November 2018, after rising 7.0 percent from November 2016 to November 2017.
The industry sources cited strong buyer demand and continued constraints on supply. But they never cite the role the US central bank has played in this drama. Other CoreLogic data indicate that home price acceleration peaked at 15 percent at the height of the housing boom, only to plunge by an ever greater 18 percent at the depths of the last depression.
PS: Have you ever noticed how when home prices rise or even surge, it’s always referred to as home price appreciation, and not as inflation, as is always the case in any other sector of the economy? This is an unspoken, secret rhetorical ploy designed to manipulate a gullible and uninformed populace into always supporting the real estate and mortgage industries’ narrative that buying a home is always the best financial move a person, a couple, or a family could make. Sometimes it is, many times it is not. But that’s a topic for a future post…