Wednesday, July 23, 2014

Decline In Short Sales Reduces House Inventory, Boon For Investors?

In a recent article in the Wall Street Journal by Joe Light, it talks about the decline in house inventory created due to the drop in short sales inventory. There are references in the article to the inventory shortage being negative for some markets. Needless to say for the real estate investor, having lower inventory usually translates to appreciation. As sellers are more and more on the sidelines and the overall inventory goes down, the old supply-demand equation rears its (pretty) head resulting in price appreciation. This of course is a two-edged sword. It's great for the properties you had already purchased, but it is not so great for the ones you eye buying in the future. The very drop in short sales itself has to do with appreciation. As houses get closer to parity with their loans, short sales don’t make sense anymore.

Another reason, of course, is the expiration (in December) of the Mortgage Forgiveness Debt Relief Act (passed by congress in 2007). With the expiration of the Act, sellers are now liable for taxes on the forgiven portion of their loans during short sales, naturally creating reluctance on the part of sellers to go that route. In the meantime we are seeing financing improving for investors and even some initial programs here and there for the foreign buyers. Stay tuned. We will be discussing the state of the market on short sales at our next Real Estate 1 Day Expo, on September 13th. You can register here.

Below, for convenience, is the entire WSJ article:
 
Drop in Short Sales Trims House Inventory
By Joe Light
June 20, 2014 9:43 p.m. ET

Short sales of underwater homes have fallen sharply amid the expiration of a key tax break, a situation that could slow the housing recovery and further limits an already thin supply of houses for sale. Such sales, where owners sell their homes for a price below the balance on the mortgage, reduce the number of houses that end up in foreclosure. In most cases for the sale to proceed, lenders must approve the purchase and agree to forgive the unpaid portion of the mortgage owed by the homeowner.

Short sales had been especially common in recent years in hard-hit states like Florida, Michigan and Nevada, where most homes remain valued at prices that are substantially lower than during the housing boom. In March, about 5% of home purchases nationwide—some 18,258—were short sales, according to mortgage-technology-and-services firm Black Knight Financial Services. That was down from 6.4% in February and off sharply from the 19.7%, or 51,909, that were short sales in January 2012.

This year's drop can be traced in part to the December expiration of the Mortgage Forgiveness Debt Relief Act, which Congress originally passed in 2007. Before the act, when a home was sold through a short sale and the lender forgave a portion of the mortgage debt, the seller would typically be required to pay income taxes on the amount forgiven. The act made the forgiven debt tax-free, which paved the way for short sales and helped speed the housing recovery.

"It's a big concern," said Veronica Malolos, a real-estate broker in Kissimmee, Fla. Ms. Malolos said some underwater sellers delisted their properties in January and February after learning that the tax provision wouldn't be extended. Ms. Malolos's clients Javier and Mayra Gonzalez in Kissimmee said they tried to sell their home last summer after Mr. Gonzalez found a new job but took it off the market in the new year. The couple received offers of about $145,000 on the home, on which they owe about $206,000, including debt from a home-equity line of credit, but their bank wouldn't accept them. Because the mortgage act wasn't extended, the couple estimate they would owe about $15,000 in additional income taxes based on the $61,000 difference, something they say they couldn't afford.

This year, the couple's bank began foreclosure proceedings on their home, but they said they are working things out with the bank and are staying put, even though Mr. Gonzalez now has a commute of about an hour and 40 minutes each way to his new job in Vero Beach. Short sales also have tumbled because of rising home prices, which pushed many homes back above water or closer to it. The median existing-home price nationwide was $201,700 in April, 5.2% higher than in April 2013, according to the National Association of Realtors. In the first quarter, about 19% of homes were worth less than their mortgage, according to the real-estate-information website Zillow, down from 31% a year ago.

With would-be short sellers on the sidelines, the housing market may take longer to work through remaining underwater homes, restricting the already tight home inventory on the market. If some potential short sellers decide to go through a foreclosure instead, that could cause higher losses for mortgage-bond investors, or companies that guarantee payment of mortgages, which tend to recover less in a foreclosure because of the costs of carrying a home.

The Senate Finance Committee in April passed a bill to extend the forgiveness provision, along with many other tax breaks that had expired. But the bill stalled in May after Senate Majority Leader Harry Reid and Republicans couldn't agree on how to amend the measure. Now some analysts don't expect Congress to move on a bill until December, after the midterm elections. Any extension would likely come as part of a wider package of tax-break extensions. "This is trapped, and there's little hope of prying it loose," said Jaret Seiberg, financial-policy analyst for Guggenheim Securities LLC.

In the meantime, real-estate agents say sellers are loath to consider short sales on homes, even when facing foreclosure as the alternative. That is a problem not just for troubled homeowners, but also for banks and mortgage giants Fannie Mae and Freddie Mac, which typically lose more money when homes are sold through a foreclosure than through a short sale. In the first quarter, for example, Freddie Mac said that in short sales, it recovered 68.4 cents for every dollar of unpaid principal. In foreclosures, Freddie recovered 64.4 cents for every dollar. "There are still millions of homes underwater, but short sales have fallen off considerably," said Mark Zandi, chief economist at Moody's Analytics. "It's gumming up the system" and could be limiting home-buyer activity.

Write to Joe Light at joe.light@wsj.com
 

Tuesday, June 10, 2014

New Markets Join the Fray as Pricing Changes

Up until the beginning of 2012 there were some states that lead the way as far as investor interest: California, Nevada, Arizona and Florida. That interest on the part of investors was justified, as these four states were the most clearly noticeable examples of recession housing prices. These four states were the “poster children” for extreme housing price collapse.

During 2012 and 2013 all four states exhibited strong housing price appreciation. Phoenix led everyone with a 70% jump. Las Vegas wasn’t far behind and California process improved rapidly. Florida prices went up but the uptick was tempered by far slower judicial foreclosure processes in Florida, as opposed to the quick and efficient trustee sale in the other three states.


Now, in the middle of 2014, Florida prices have improved quite a bit and yet, due to the slow foreclosure process, which creates a steady trickle of supply into the marketplace, Florida is still a place where investors look to buy. However buying in Arizona, Nevada and California has slowed significantly for now.
Other states, which have not experienced such extreme price swings, are now becoming attractive investor destinations.

A prime example is Oklahoma City, with low unemployment and the benefit of the oil & gas industries. Rents are high and property taxes are low. Similarly, other “middle of the country” markets in states like Kansas and Missouri are starting to attract more buyers, as is the state of Texas (with a strong economy, high rents, but also very high property taxes and insurance rates) and states like Ohio.
Overall it is possible that soon the effects of the recession will no longer be dominant and marketplace demand by investor will revert to parameters before 2008.

Some of these new markets will be present at our Real Estate 1-Day Expo this Saturday near the San Francisco Airport (see details at www.icgre.com). Call us (415-927-7504) or email us (info@icgre.com) and mention this blog entry and receive my book, for free, with registration at www.icgre.com.


Wednesday, June 4, 2014

How to Create Multiple Income Steams to Secure a Strong Financial Future


Exploring this and other avenues for finding financial real estate success during our 1-Day Expo. 
As many of you know, we are holding our 1-Day Expo on Saturday, June 14th from 10:00-6:30 p.m. Even though we have been holding these events for over 20 years, I am always excited before we hold them. I know I will learn so much from the expert lecturers, the market teams who bring information straight “from the trenches” and from all of YOU who attend.
Just the Q&A sessions are so informative, I have yet to partake in one of our events and not learn a tremendous amount of valuable information during these sessions.
The networking is also so valuable, bringing new connections and new synergy.
This time we have three expert lecturers:
Attorney Brett Lytle on Asset Preservation & Protection. Brett always sees the smallest details, which stay hidden from most observers. He has led countless people to creating a safer, more secure way to hold assets and will teach all of us how to do this.
Lucian Ioja uses his vast experience and knowledge to show us how we can create multiple streams of income and plan our financial life in a proactive, fruitful way. He also teaches us to utilize many different avenues to create these income streams; from using insurance in a sophisticated manner, to real estate and other vehicles that we will explore.
Roger St. Pierre will teach us about getting non-recourse mortgages to buy real estate, with financing,  from our IRA accounts. A lot goes into this and that is why we invited Roger to instruct us.
There will be lenders with new types of investor (and homeowners) loans to tell us about.
We are bringing in three new markets with exciting deals at attractive price points, including brand new homes, as well as low-cost turn-key homes with tenants AND easy special financing even to investors who had been spurned by the banks.
Updates from the existing markets are always so fascinating. The work and preparation that goes into these refresher points from the markets always amazes me. There is so much to learn and so much to feel the pulse of what goes on nationally.
I’ve been ask to do something special for the blog readers, and we will give everyone who registers and mentions this blog, a free copy of my book Remote Controlled Real Estate Investing which goes into the details of buying properties far from home. So, register today to secure your spot and as an added bonus receive my book. For free.


I am excited and very much looking forward to seeing you at our event. The 1-Day Expo will take place near the San Francisco Airport, at the South San Francisco Conference Center. We set the Expo time so people can fly in and fly out on the same day if they are not from the San Francisco Bay Area – the day starts at 10:00AM and ends at 6:30PM, providing attendees from Los Angeles, San Diego, Portland, Seattle, Phoenix and wherever it is that you call home to arrive and leave on the same day.
Of course, for Bay Area residents it is an easy drive and everyone appreciates the ample free parking at the conference center.
To register online through Eventbrite: http://bit.ly/1kk2she  and use the code: BLOGBOOK

or

Email us at info@icgre.com or call us at 415-927-7504 and mention you read about the expo on my blog.



Best,
Adiel

Thursday, May 29, 2014

Why Americans Are Heading Back to the Suburbs


The trend towards moving out to the suburbs seems to be increasing as people seek more room for kids to play, a bit more privacy, and the usual amenities associated with suburban living, says Neil Shah in an article from last week in the Wall Street Journal.

For us as investors, this is an interesting trend as we have focused on investing over the entire metropolitan area with an emphasis on the suburbs, since homes in the suburbs usually mean a rental family, likely with kids, which translates to greater rental stability.

This movement plays right into our investment emphasis and is encouraging to see. We will discuss this trend and many more pertinent issues during our 1-Day Expo Saturday June 14th near the San Francisco Airport (click here to register.) We will have expert lectures on asset preservation, general financial planning and non-recourse IRA loans for houses. Our ICG Real Estate Investors team from the top real estate markets in the nation will be present all day providing learning tools and networking opportunities.

Below is the entire Wall Street Journal article:
Signs of a Suburban Comeback
More Americans Returning to the Land of Lawns and Malls, Census Data Show
By Neil Shah
May 22, 2014 12:00 a.m. ET

America's big cities have grown faster than their suburbs in recent years, due in part to a slow economy that froze people in place and stunted the suburban swell. Though, a new Census report suggests this trend is starting to reverse. WSJ's Neil Shah joins MoneyBeat with the statistics and what they mean. 

The long tug of war between big cities and suburbs is tilting ever so slightly back to the land of lawns and malls. After two years of solid urban growth, more Americans are moving again to suburbs and beyond.

Fourteen of the nation's 20 biggest cities saw their growth slow or their populations fall outright in 2012-2013 compared with 2011-2012, led by cities such as Detroit and Philadelphia, according to data released Thursday by the U.S. Census Bureau.

A housing subdivision outside of Chicago. Suburbs are seeing a recent increase in growth. Flickr Editorial/Getty Images


In some cases, fast-growing cities are slowing down: Austin's growth rate decreased from 3.1% to 2.4%. In other instances, slower-growing cities grew at an even more diminished pace: New York's rate decreased to 0.7% from 0.9%. A year earlier, 17 of the nation's 20 largest cities showed faster population growth than the previous year. Suburbs and areas beyond suburbs within the same metro known as exurbs, meanwhile, are seeing an uptick in growth after expanding more slowly during the recession and its aftermath.
All told, just 18 of America's 51 metropolitan areas with more than 1 million people had cities growing faster than their suburbs last year, down from 25 in 2012, according to an analysis of census data by William H. Frey, a demographer at the Brookings Institution.
"City growth may be bottoming out, as well as the downsizing of the outer suburbs," Mr. Frey said. He said it remains unclear "whether the city slowdown signals a return to renewed suburban growth."
Natalie Dorr and her husband Jon are among those who made the shift to the suburbs last year. The couple wanted to sell their condominium in Chicago and move out of the city much earlier, but the sluggish economy delayed their plans. Ms. Dorr, 29 years old, was pregnant with their second child and the couple wanted more space. Yet they waited, hoping the selling price of their condo would increase.
In April last year, the couple rented out the condo and moved to Deerfield, a Chicago suburb. Having sold the condo a week ago, they plan to buy a home later this year. They got $14,000 more for the condo than they would have if they had sold earlier, Ms. Dorr said. "It made sense to wait," she added.

Overall, cities are still growing slightly faster than the suburbs—a historical anomaly after decades of American migration to the burbs. Some of the growth has been fueled by younger Americans and retirees preferring city life, either for life-style reasons or to downsize their living arrangements.
Anything resembling the post-World War II trend of Americans streaming to the suburbs appears unlikely given the difficulties many debt-strapped young Americans face in buying a home. Still, the Census numbers show a cooling off in the growth rate of urban dwellers.
Cities in metro areas greater than 1 million people grew at a 1.02% annual rate in 2012-2013, down from 1.13% in 2011-12, according to Mr. Frey's analysis. Suburban areas, by contrast, grew at a rate of 0.96%, roughly on par with the 0.95% the prior year, Mr. Frey's analysis shows.
At the same time, exurbs are seeing an increase in growth. When taken together, suburbs and exurbs grew at a 1.04% annual rate in 2012-13, up from 0.99% in 2011-2012, according to a separate analysis by Mr. Frey. Urban core areas saw growth fall to 0.81% from 0.91%.
The slowing growth in these urban cores and the increasing gains in the suburbs may be the first indication of a return to more traditional patterns of city-suburban growth," said Ken Johnson, a demographer at the University of New Hampshire.

Write to 
Neil Shah at neil.shah@wsj.com

Saturday, May 17, 2014

Mortgage Rules Set to Ease


An article in the Wall Street Journal dated May 14, 2014 - right on the front page, is an article by Nick Timiraos and Deborah Solomon. The article is about how, after a few years of tight mortgage lending, the U.S. government is set to ease the criteria to get home loans. Needless to say this is music to our ears.As more buyers can enter the marketplace, demand is likely to increase and so are prices.

The housing sector will get a much-needed shot in the arm and for investors, there will be many more potential buyers upon liquidation. Will easing bring us closer to another mortgage meltdown? Possibly, but I think lessons have been learned during the recession which will prevent a wholesale catastrophe as we have seen before.
My opinion is that for us as real estate investors this is an excellent bit of news. And remember – get your own 30-year fixed rate mortgage as soon as you can at these rates, which likely will increase in coming years. We will discuss this and much more at our quarterly 1-Day Real Estate Expo Saturday June 14th near SFO. Please see more details and to register, click here.Looking forward to seeing you!

U.S. Backs Off Tight Mortgage Rules


In Reversal, Administration and Fannie, Freddie Regulator Push to Make More Credit Available to Boost Housing Recovery


By Nick Timiraos and Deborah Solomon


The Obama administration and federal regulators are reversing course on some of the biggest post-crisis efforts to tighten mortgage-lending standards amid concern they could snuff out the fledgling housing rebound and dent the economic recovery. Nick Timiraos reports.


WASHINGTON—The Obama administration and federal regulators are reversing course on some of the biggest post crisis efforts to tighten mortgage-lending standards amid concern they could snuff out the fledgling housing rebound and dent the economic recovery.


Click here for the rest of the article.

Monday, April 7, 2014

Many Homes No longer Underwater – Good for the Investor?

In a recent article written by Kenneth Harney in the Los Angeles Times, we learn that four million homeowners are no longer “underwater” on their loans. As many of us know, a good number of these homes may be investor-owned. Obviously this is good news for the economy at large.

It is also good news for real estate investors -- if someone is in the process of foreclosure, rising prices lower the deficiency exposure for the individual (this is true for homeowners as well as investors, of course).
In addition, investors with clean credit can use the rising equity to refinance and get the great rates which can be obtained today, and in many cases improve their cash flow (possibly) quite significantly.

Needless to say, in some of the markets investors may even begin to think about selling and if they bought in 2009-2011, may already realize nice gains. Most investors are more interested in keeping the homes, as appreciation is likely to occur in markets that really overshot down during the recession (like in Arizona, Nevada and Florida, which are specifically mentioned in the article as still carrying a lot of underwater properties). Nevertheless the rising prices create a sense of success (not to be trifled with) and in some cases, more options and room to maneuver assets.


Here is the article:

4 million homeowners climb out of negative equity

More owners transitioned from negative equity into positive territory last year, a good sign for the economy overall. But many remain underwater on their mortgages.

By Kenneth R. Harney
March 16, 2014, 5:00 a.m.

WASHINGTON — The economy may be growing at a frustratingly slow pace, but one piece of it is booming: American homeowners' equity holdings — the market value of their houses minus their mortgage debts — soared by nearly $2.1 trillion last year to $10 trillion.

Big numbers, you say, and hard to grasp. But look at it this way: Thanks to rising prices and equity levels, about 4 million owners around the country last year were able to climb out of the financial tar pit of the housing bust — negative equity.

Negative equity gums up people's lives and the real estate marketplace as a whole. It makes it difficult or impossible for many owners to refinance out of a higher-cost mortgage into a more affordable one. It makes it painful to sell — you've got to bring cash to the table to pay off what you still owe to the bank. Plus almost no one wants to lend you money, at least not at reasonable interest rates secured by your real estate, when you're deeply underwater. So you're likely to spend less and invest less, and you're probably not going to buy another house. Nor will potential new buyers be able to purchase yours.
So when 4 million owners manage to transition out of negative equity into positive territory, that's significant news not just for them personally, but for the economy overall.

Two statistical studies released this month offered a glimpse of where the country is in terms of homeowner equity, seven years after real estate began to tumble and crash. The first was theFederal Reserve's quarterly "flow of funds" report. Among many other segments of the economy it toted up, the Fed found that homeowner equity has rebounded to its highest level in eight years — though it's still not quite back to the $12 trillion it was during the hyperinflationary high point of the housing boom in 2005.

The second study, from real estate analytics firm CoreLogic, focused on the flip side — the impressive shrinkage of negative equity. According to researchers, nearly 43 million owners with mortgage debt have positive equity. Roughly 6.5 million owners are still in negative equity positions, however, down from more than 10 million a year ago and 12 million in 2009.

Who are they and where are they? Not surprisingly, they are heavily concentrated in areas that saw the wildest price run-ups, the heaviest use of toxic loan products and the steepest plunges during the crash. In Nevada, 30.4% of all owners with mortgages are underwater. In Florida, the percentage is 28.1%, and in Arizona, it's 21.5%. Still, all three areas have improved sharply over the last two years.

Although non-costal California markets suffered some of the most dramatic declines in property values during the bust, researchers found that the state as a whole is nowhere near the top of the latest negative equity list. With 12.6% of mortgaged homes underwater, California has a lower overall negative rate than the national average (13.3%), and has relatively fewer underwater homes than Maryland (ranked 10th worst in the country with a negative equity rate of 16.2%), Ohio (19%), Illinois (18.7%), Rhode Island (18.3%) and Michigan (18%).

Among the best markets if you're measuring for positive equity: Texas, where just 3.9% of owners are in negative positions, Alaska (4.2%), New York (6.3%), Oklahoma (6.4%) and the District of Columbia (6.5%.) Higher-priced houses generally have lower rates of negative equity compared with houses in lower-priced areas, many of which saw construction booms for entry-level, low- and moderate-cost homes in the suburbs of major cities during the boom years. Just 8% of mortgaged homes worth more than $200,000 have negative equity, compared with 19% of homes under $200,000.
Having positive equity is one thing, but do you have adequate equity? Or are you, as CoreLogic refers to the phenomenon, "under-equitied"? Researchers define under-equity as mortgage debt that is in excess of 80% of your home's resale value

This is important in practical terms, they say, because having less than 20% equity makes it more difficult for you to pursue potentially helpful financial options, such as refinancing your primary home loan or obtaining an equity credit line. About 21% of all mortgaged homes nationwide are currently in this situation, and 1.6 million owners have less than 5% equity.
Distributed by Washington Post Writers Group






Tuesday, March 11, 2014

Home Price Appreciation Creating Attractive Rentals For Investors

In yesterdays Wall Street Journal there was an article (below) by Nick Timiraos regarding the effects of home price appreciation on affordability. As the article states, rising interest rates, a dearth of housing stock in many market, still-tight lending criteria and a slow builder’s resurgence, create a real difficulty for many people  to buy their first home. Needless to say, investors reap a certain benefit from this situation by enjoying an expanding demand for rentals. Since many investors have the means and sophistication to buy homes, the expanding rental pool actually improves the investment situation.

Here is the article as it appeared yesterday: 
 

Surging Home Prices Are a Double-Edged Sword

Affordability Troubles Grow, Especially for First-Time Buyers

 
March 9, 2014 4:35 p.m. ET

The U.S. housing market faces a challenge at the start of the spring sales season: higher prices.
It is hard to overstate the benefits of rising prices to the economy broadly and to homeowners, banks and home builders specifically after years of declines. Price gains have pulled more Americans from the brink of foreclosure and given home buyers more confidence that they won't get stuck with an asset whose value will decline.

But those gains have a painful edge, too, especially because prices have bounced back so strongly. The increases have rekindled concerns about affordability, particularly for first-time buyers, and could damp the gains of a housing rebound still in its early stages. The U.S. housing market faces an unexpected challenge at the start of the spring sales season: home prices are on a tear. Price gains have pulled more Americans from the brink of foreclosure and boosted demand from consumers no longer afraid to buy.

"Prices ran up so fast in 2013, it hurt first-timers' ability to become homeowners," said John Burns, chief executive of a home-building consulting firm in Irvine, Calif. "It's going to be a slower recovery than people had hoped because a number of people have been priced out of the market." Home values nationwide are up 11% over the past two years, according to real-estate information service Zillow Inc. and 14% below their 2007 peak. Mortgage rates, which jumped a full percentage point to about 4.5% in the past year, have sharpened worries over housing affordability.

Even as prices have increased, housing still appears affordable by one traditional gauge. Since 1990, American homeowners have spent about 24% of monthly income on their mortgage payments, according to data from Morgan Stanley. Today, that payment-to-income ratio stands at around 20%, below the long-run average. The problem with that view of affordability: It assumes borrowers have great credit and large down payments. The ratio isn't favorable for first-time buyers and others with lower incomes and smaller down payments, which increases their monthly financing costs. The payment ratio for first-time buyers was around 24% at the end of last year, in line with its long-run average, according to the Morgan Stanley analysis.

This pinch on first-timers is troubling because, so far, the housing recovery has depended to an unusual degree on cash buyers and investors. The relatively weak position of entry-level buyers could further suppress the homeownership rate—now off more than four percentage points from its 2004 peak—as more of them rent, said Vishwanath Tirupattur, a managing director at Morgan Stanley. Making matters worse, home prices are going up fastest in markets that are already expensive, such as San Francisco and Los Angeles. Just 32% of California households at the end of last year could afford the monthly payments on a median-priced home in the state of $431,510, assuming a 20% down payment, according to the California Association of Realtors. That was down from 56% of households that could afford the payments on a $276,040 median-priced home in early 2012.

Rising prices are only part of the problem for first-time buyers. Inventory shortages and tougher mortgage-qualification standards benefit buyers who can make large down payments and those who can forgo a mortgage altogether. Because many markets have low supplies of homes for sale, all-cash buyers have routinely beat out first-time buyers by guaranteeing a quick, worry-free closing for sellers.

Meanwhile, federal officials have repeatedly increased insurance premiums on loans backed by the Federal Housing Administration, which serves many first-time buyers because it requires down payments of just 3.5%. While mortgage rates at the end of 2013 reached their highest levels in more than two years, the all-in cost of an FHA-backed loan—due to insurance-premium increases—was closer to a five-year high.
Rising prices are less of a problem for current homeowners seeking to trade up because they can tap growing home equity to make their next home purchase. An index tracking housing affordability from data firm CoreLogic Inc. shows that homes were 17% less affordable for first-time buyers at the end of last year compared with the year before, while the index was down just 6% for existing homeowners.

Ideally, higher prices would stimulate more home construction, which would ease inventory crunches that are partly responsible for price increases while boosting job growth. But builders have been slow to ramp up production, skittish after being caught with too much inventory when the 2008 downturn hit. Last year, many focused instead on higher-end houses, while entry-level construction was subdued. Sales of new homes last year rose by 14% from 2012, but the number of homes sold for less than $150,000 fell by 28%. Sales above $500,000 grew by 36%.

The worry is "a situation develops where construction remains low and prices continue to outpace incomes before first-time buyers can get in, and the next thing you know, you have to" bypass standard mortgage-qualification rules "to get people into homes," said Thomas Lawler, an independent housing economist in Leesburg, Va.

Others fret that low interest rates have allowed prices to rise too fast relative to incomes, which have stagnated. While homes are still affordable on a monthly payment basis because of cheap financing, homes no longer look like a bargain when comparing prices to incomes. For the past few years, policy makers have focused on breaking a vicious downdraft in home prices. Now, it wouldn't hurt housing to see price gains flatten out, especially if income growth remains tepid. If not, the housing market's roller-coaster ride will continue.

Write to Nick Timiraos at nick.timiraos@wsj.com.