//Home prices avoid tsunami inflation as housing market nears its peak

Home prices avoid tsunami inflation as housing market nears its peak

The price of housing is higher than historical norms, but to a much lesser degree than it was in 2006, according to a Florida Atlantic University College of Business study.

“It looks like we’re in for more of a very high tide, as opposed to a tsunami, as residential prices peak in this latest cycle,” said Ken Johnson, a real estate economist at the college, in a press release. “All evidence is suggesting that the national housing market is peaking. However, this time around, from a national perspective, things should turn out quite differently.”

Home prices last year were only 7% above long-term historical norms, an analysis of data from the Standard & Poor’s CoreLogic Case Shiller 20-city index shows.

During the 2006 bubble, the home-price inflation was much more extreme at 31%, according to the study, “Where Are We Now with Housing: A Report.”

Also more extreme than 12 years ago was the downward pressure on housing demand, scores from the Beracha, Hardin & Johnson Buy vs. Rent index show.

On a scale of 0 to 1 on which 1 is the highest possible score on the index, representing maximum pressure on demand, housing in 2018 had a score of 0.39. In comparison, during the summer of 2006, the index was just shy of a score of 1.

Pressure on housing demand is more varied at the local level, the report noted. Dallas, Denver and Houston, for example, “are all currently significantly above their long-term housing price trends, with very high scores on the BH&J index,” according to the college’s press release.