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.