Tags: Mark Hanson | Housing Bubble | 2006 | Economy

Analyst Mark Hanson Sees Housing Bubble 'Larger Than 2006'

Analyst Mark Hanson Sees Housing Bubble 'Larger Than 2006'

By    |   Thursday, 08 October 2015 06:04 AM

As the late Yogi Berra might have said, it’s deja-vu all over again for the beleaguered housing market.

While home prices nationally haven’t returned to their peak of the last housing boom, CNBC warns that some experts claim the housing market is in a bubble far worse than the devastating 2006 collapse.

The dire prediction is because they claim housing is far less affordable today than it was back then, and the home price gains are driven not by healthy, end-user demand but by a lack of construction, artificially low interest rates, and institutional and foreign all-cash buyers, CNBC reports.

"In the days of "anything goes," ninja financing caused housing prices to lurch higher, which forced people to rush in and buy, which in turn pushed prices higher, thus increasing volume more, and so on. But when it comes to the new-era, end-user buyer, that can't happen any longer, as buyers actually have to fundamentally "qualify" for the mortgage for which they apply," housing analyst Mark Hanson wrote in a note to clients.

Hanson, often criticized for being a housing bear, points to the institutional and foreign buyers who have flooded the market since 2012, buying up distressed and lower-priced homes, as well as some new construction, all with cash. He calls it an exact replay of the last housing boom, CNBC reported.

“Put simply, house prices surging higher, leading a housing market plagued with pitiful demand is something totally unique to “this” housing market “recovery.” And based on my research and experience, this is not what a “durable recovery with escape velocity” is made of,” Hanson wrote.

“In short, end-users today are being handed a red, hot-potato market already in a bubble larger than 2006.”

California-based real estate analyst John Burns, of John Burns Real Estate Consulting, called Hanson's premise "ridiculous." He said you cannot compare affordability today to the heady days of the housing boom, CNBC reports.

But other prominent financial voices are worried about housing market.

Robert Shiller, Nobel Prize-winning economist, told Yahoo Finance that recent gains in the housing market may not be sustainable.

“I'm starting to worry a little bit, it's getting high by historical standards,” he says, adding that housing is a cause for concern, but it's not quite like the stock market yet in terms of valuations.

“Usually housing has not been a great investment, owner-occupied housing,” he says.

“Unless it gives you pleasure... I think people tend to overestimate the investment value of housing, especially at a time like this, when home prices are already high.”

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While home prices nationally haven’t returned to their peak of the last housing boom, CNBC warns that some experts claim the housing market is in a bubble far worse than the devastating 2006 collapse.
Mark Hanson, Housing Bubble, 2006, Economy
424
2015-04-08
Thursday, 08 October 2015 06:04 AM
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