Tag Archives: Bedford NY Luxury Homes for Sale

The single biggest risk to housing is rising mortgage rates | Bedford Real Estate

This is not a repeat of the 2008 housing bubble

The wounds from the Great Recession of the mid-2000s are still healing, especially when it comes to housing. An estimated 10 million people lost their homes to foreclosure from 2006 to 2014, following a period of frenzied and speculative home buying fueled by easy credit. The housing market is yet again on a tear with home prices up nearly 19% nationally compared with last year, and that has people rightfully worried that another housing bubble is brewing.

In order to determine if the current housing market is in a bubble, one needs to ask what constitutes a housing bubble. A bubble is present when the price of an asset is rising faster than the fundamentals can justify, often driven by overly optimistic speculation or loose financing. Moreover, a bubble requires conditions that would permit a crash—that is, a period of asset prices falling faster than fundamentals. Rising prices alone, however, are not a sign of a bubble.

Unlike the last housing boom, one could argue that home price growth since the start of the pandemic was justifiable. The demographics of the U.S. were already supporting housing growth and the desire to own only increased as people saved more and spent more time at home. The lifestyle change brought on by the pandemic caused many Americans to reassess their living arrangements, including some renters that turned into house hunters and some existing homeowners that sold to move into a larger home.

The jump in home buying demand hit right as existing housing supply declined rapidly for a variety of reasons, including fear of COVID-19. Home builders, most of whom became more prudent following the last cycle, were cautious with how many homes they were bringing to the market, resulting in equally tight new home inventory.

The supply and demand mismatch pushed prices upward, but that was just the tip of the iceberg for rising home values. Some Americans became much wealthier over the past year following a 31% run-up in the S&P 500 and a nearly 20% jump in home equity. Others became wealthier on a relative basis as remote work led to increased migration, often from higher cost areas to lower cost ones.

Of the contributors to rising prices, none have been more powerful than mortgage interest rates. The interest rate on a 30-year fixed mortgage averaged 6% from 2002 to housing’s peak in 2005. For comparison, the average mortgage rate from April 2020 through today is just 3%. 

Historically, a gut check of a housing bubble is the home-price-to-income ratio. While home prices appear high compared with incomes, this does not account for interest rates. When we look at the home-payment-to-income ratio, an important measure of affordability, levels are below last cycle, showing the power of cheap financing.

Further, safety measures have been put in place since the Great Recession to help prevent a similar housing collapse. Mortgage credit availability is starkly tighter than in the mid-2000s and the often more risky adjustable rate mortgages represent less than 5% of total purchase and refinanced loans compared with over 35% at the peak of the last cycle. 

However, there are unhealthy signs in housing as well. Investors, a staple of the last cycle, are back. One common measure of tracking investor activity is all-cash sales, which represent 23% of total transactions. While all-cash sales are up from 16% last year, they are still down from a high of 35% in 2011. Home shoppers are feeling the impact of investors active in today’s market, especially at the lowest price points. 

The fear-of-missing-out mentality has also returned, which has resulted in some making rash decisions. People are fearful that if they don’t buy today, they may miss their chance at home ownership forever. This thought process is leading to bidding wars and further upward pressure on pricing, which is resulting in first-time buyers and lower-income home shoppers finding themselves priced out of the market. Others believe that the frenzy has gone too far, and even some that are financially able to buy a home have reached a tipping point and are balking at prices.

As we move forward, we can take comfort that many of the mortgage guardrails in place are working, with creditworthiness strong and speculative lending largely absent from the market. While today’s prices can be justified, it is unwise to believe they can only go up. 

The single biggest risk to housing—rising mortgage rates—is a real possibility in the next year, and that could bring prices down. Further, other economic, financial, and confidence challenges could also result in a drop or flattening of home prices, even with solid buyers in place. But a drop or flattening in home prices is a far cry from the crash we saw during the Great Recession.

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fortune.com/2021/housing-bubble

Building materials prices continue to rise | Bedford Real Estate

Prices paid for goods used in residential construction ex-energy rose 1.7% in April (not seasonally adjusted) and have increased 12.4% over the past 12 months, according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. Building materials (i.e., inputs to residential construction less food and energy) prices have declined just twice since December 2019.

The index for inputs to residential construction, including food and energy, increased less (+1.3%) as the index for final demand energy declined 2.4% over the month.

Steel mill products prices climbed 18.4% in April following a 17.6% increase in March.  Prices are up 55.6%, year-to-date, and the month-over-month percentage increase set a record high for the third month in a row. Steel mill products price volatility is greater than it has been at any time since the Great Recession.

Over the past three months, prices have climbed 22.0%.  Perhaps more concerning than rising prices is that the pace of price changes has quickened each of the past nine months.

Prices paid for softwood lumber (seasonally adjusted) rose 6.5%, setting a new record high for the third consecutive month. Lumber prices have remained extremely volatile since the 88.5% increase between April and September 2020. Since falling 22.9% between September and November, the softwood lumber PPI has risen 52.0%.

In addition to nominal price movements and tariffs on Canadian lumber, cross-border purchasers are affected by the strength of the U.S. dollar relative to the Canadian dollar. The USD has depreciated 5.0%, year-to-date, and 13.1% over the past 12 months.

Prices paid for gypsum products increased 4.4% in March bringing the two-month increase to 6.6%. The PPI for all gypsum products has increased 12.5% over the past 12 months while the index for gypsum building materials (e.g., drywall) is up 13.3%.

Prices paid for ready-mix concrete (RMC) climbed 1.1% (seasonally adjusted), following a 0.2% increase in February. RMC prices have exhibited unusual volatility since early 2018. increasing or decreasing by 1.0% or more five times during the period. Since January 2000, RMC prices have moved by 1.0% or more 26 times and five have been over the past three years.

Prices increased in all four regions from March to April, up 2.8%, 2.0%, 0.8%, and 0.8% in thes Northeast, West, South, and Midwest, respectively. The index increased the most in the Northeast (+5.6%), followed closely by the West (+5.3%).  In contrast, prices held relatively steady in the Midwest (+2.0%) and declined 0.6% in the South, year-over-year.

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eyeonhousing.org

U.S. home building surges 14% | Bedford Real Estate

U.S. homebuilding increased more than expected in October as the housing market continues to be driven by record low mortgage rates, but momentum could slow amid a resurgence in new COVID-19 infections that is putting strain on the economic recovery.

The report from the Commerce Department on Wednesday also showed building permits unchanged at a 13-1/2-year high. It followed on the heels of data on Tuesday showing the smallest gain in retail sales in October since the recovery from the pandemic started in May. The economy is slowing as more than $3 trillion in government coronavirus relief dries up.

Daily new COVID-19 cases have been exceeding 100,000 since early this month, pushing the number of infections in the United States above 11 million, according to a Reuters tally. Several states and local governments have imposed restrictions on businesses, raising fears that the resulting weak demand could unleash a fresh wave of layoffs that could reverberate across the economy and slow the housing market’s run.

“The million dollar question remains how long the recovery in housing can continue as the shocking number of new coronavirus cases is paralyzing commerce in many parts of the country and leading to new restrictions and lockdowns,” said Chris Rupkey, chief economist at MUFG in New York.

Housing starts rose 4.9% to a seasonally adjusted annual rate of 1.530 million units last month. That lifted homebuilding closer to its pace of 1.567 million units in February. Economists polled by Reuters had forecast starts would rise to a rate of 1.460 million units in October.

Permits for future homebuilding were unchanged at a rate of 1.545 million units in October, the highest since March 2007.

The densely populated South region accounted for 56.1% of homebuilding last month. Groundbreaking activity also rose in the West and Midwest, but tumbled in the Northeast.

Homebuilding surged 14.2% on a year-on-year basis.

Single-family homebuilding, the largest share of the housing market, raced 6.4% to a seasonally adjusted annual rate of 1.179 million units last month, the highest level since April 2007.

Single-family starts have increased for six straight months. This segment of the market is being boosted by the pandemic, which has seen at least 21% of the labor force working from home. That has led to a migration from city centers to suburbs and other low-density areas as Americans seek out spacious accommodation for home offices and schools.

“The South and inland and mountain regions of the West are seeing a huge influx of residents from the large metro areas in the Northeast and West Coast,” said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. “Just over 80% of all single-family homes built over the past year have been in the South or West, which means that construction can continue at a much higher pace during the winter months than in prior years.”

A survey on Tuesday showed confidence among single-family homebuilders rose to an all-time high in November. But builders said “lot and material availability is holding back some building activity.”

Single-family building permits climbed 0.6% to a rate of 1.120 million units in October.

A separate report on Wednesday from the Mortgage Bankers Association showed applications for loans to buy a home increased 4% last week from a week earlier.

The coronavirus recession, which started in February, has disproportionately affected lower-wage earners. At least 20 million people are on unemployment benefits.

The PHLX housing index was trading higher, outperforming a mixed U.S. stock market. The dollar slipped against a basket of currencies. Prices of longer-dated U.S. Treasuries were trading higher.

Though the housing market accounts for a fraction of gross domestic product, it has a bigger economic footprint. Its continued strength should help to keep the economy afloat even as GDP growth is expected to decelerate significantly in the fourth quarter after a historic performance in the July-September period.

Homebuilding is being driven by lean inventories, especially for previously-owned homes, and low mortgage rates. The 30-year fixed mortgage rate is around an average of 2.84%, according to data from mortgage finance agency Freddie Mac.

Starts for the volatile multi-family segment were unchanged at a pace of 351,000 units. Building permits for multi-family housing projects fell 1.6% to a rate of 425,000 units. It was the third straight monthly decline.

“This is an indication that developers are reining in investment as rental vacancy rates have risen,” said Matthew Pointon, property economist at Capital Economics in New York.

According to Wells Fargo Securities’ Vitner, rental data also suggest a shift in renter preferences away from urban lifestyle apartments to suburban apartments that offer more outdoor amenities.

Housing completions fell 4.5% to a rate of 1.343 million units last month. Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to close the inventory gap. The stock of housing under construction increased 1.2% to a rate of 1.224 million units, the highest since December 2006.

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https://www.reuters.com/article/us-usa-economy-housingstarts/u-s-housing-starts-blow-past-expectations-covid-19-poses-risk-idUSKBN27Y1U2

Trump selling Bedford estate Seven Springs| Bedford NY Real Estate

President Trump's Seven Springs Estate
Trump (Johnny Milano for The Washington Post via Getty Images

The Trump Organization is considering selling its sprawling Westchester, N.Y., estate, according to people familiar with the matter, after years of unsuccessful development attempts that ended with an agreement to preserve part of the property.

The New York attorney general’s office has said it is examining whether any benefits Mr. Trump received from that agreement were improper as part of a broader investigation of alleged fraud by the president and his businesses.

Trump representatives have had conversations with local brokers about the possibility of a sale, the people said. The 213-acre property, known as Seven Springs, isn’t currently listed publicly. While President Trump has previously valued the property at more than $200 million, local agents estimated the property would trade for around $50 million or less. They said much of the previously perceived value was likely tied up in prior failed development plans, including a proposed residential subdivision.

A Trump Organization spokeswoman called Seven Springs “one of the largest, most valuable and most iconic properties in Bedford.” She added, “If the right opportunity presents itself, the Trump family would certainly entertain it.”

The Trump Organization has owned Seven Springs since 1995, when it purchased the property for $7.5 million. At the time, local agents said it was a bargain. Although it had been on the market for a year and was viewed as something of a white elephant, other major properties in Westchester County had sold for multiples of that amount.

Mr. Trump first attempted to build a golf course on the property but encountered fierce local opposition. The Trump Organization then pursued building a residential subdivision of luxury homes.

A 2011 Trump financial document values the property at $261 million, based on what it said was an assessment by Mr. Trump, his associates and outside professionals. It said the figure comes from the funds he would receive as homes were constructed and sold, plus the value of the existing mansion and other buildings.

Those homes were never built. Local real-estate agents said Mr. Trump had a particularly difficult time getting his plans approved because the property straddles several municipalities—Bedford, New Castle and North Castle.

In late 2015, Mr. Trump entered into an agreement with the nonprofit North American Land Trust not to develop 158 acres of the property. That area included 95 acres of mature forest and 52 acres of herbaceous meadows, according to the agreement. Under such agreements, known as conservation easements, a property owner can deduct the land’s value in exchange for not developing it.

If the property were sold, the new owner would be bound by the terms of the easement, according to the agreement.

As part of its fraud investigation into the president and his company, the office of New York Attorney General Letitia James has said it is examining whether the value of the easement was improperly inflated to get a larger tax dedication.

The Trump Organization has said the investigation by Ms. James, a Democrat, is all about politics. Eric Trump said on Twitter that Ms. James’s “sole focus is an anti-Trump fishing expedition that she promised during her campaign.”

A 2016 appraisal, prepared by real-estate services firm Cushman & Wakefield for tax purposes at the request of Eric Trump, valued the property at $56.5 million and the easement at $21.1 million, according to court papers.

The estate dates to around 1919, when it was built for Eugene Meyer, a former chairman of the Federal Reserve, first president of the World Bank and onetime publisher of the Washington Post. The main house, designed by architect Charles A. Platt, is constructed from sandstone quarried on the property. Artisans from Italy were tapped to ensure that the home’s 60 rooms, including 15 bedrooms and two service wings, were opulently designed, according to the Trump Organization website.

The Trump Organization estimates that the mansion spans about 50,000 square feet, making it one of the largest homes in the area. It has three pools, including an indoor pool cased in white marble, as well as a large wine cellar, an antique bowling alley and carriage houses. A second home on the property, built in Tudor style in 1919, was constructed by H.J. Heinz of the Heinz Ketchup empire, who was a friend of Mr. Meyer’s.

Mr. Trump famously allowed representatives of the late Moammar Gadhafi, the then-Libyan leader who was in New York to address the United Nations General Assembly, to pitch a Bedouin-style tent on the property in 2009. After local opposition, the leader didn’t stay there.

The Trump Organization website says Seven Springs is now used as a family retreat.

A nearby property owned by horse-racing enthusiasts Barry K. Schwartz, the co-founder of Calvin Klein Inc., and his wife, Sheryl Schwartz, spans about 740 acres, nearly three times the size of the Trump property, and is on the market for $100 million. A mansion less than 20 miles away in Pocantico Hills, N.Y., that was owned by the estate of David Rockefeller, the venerable chief executive of Chase Manhattan Bank, sold for $33 million in 2018. It sits on roughly 75 acres.

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https://www.realtor.com/news/trends/trump-organization-considers-sale-of-its-seven-springs-property/

Mortgage rates average 4.31% | Bedford Real Estate

Freddie Mac  today released the results of its Primary Mortgage Market Survey® (PMMS®), showing that the 30-year fixed-rate mortgage dropped 10 basis points to 4.31 percent.

Sam Khater, Freddie Mac’s chief economist, says, “Mortgage rates declined decisively this week amid various market reports, a strong bond auction and further uncertainty around the Brexit deal, which all contributed to driving bond yields lower. At 4.31 percent, the average 30-year fixed mortgage rate is at its lowest since February of last year. While these low rates will certainly get the attention of prospective homebuyers, the supply of homes for sale remains stubbornly low.”

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 4.31 percent with an average 0.4 point for the week ending March 14, 2019, down from last week when it averaged 4.41 percent. A year ago at this time, the 30-year FRM averaged 4.44 percent. 
  • 15-year FRM this week averaged 3.76 percent with an average 0.4 point, down from last week when it averaged 3.83 percent. A year ago at this time, the 15-year FRM averaged 3.90 percent. 
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.84 percent with an average 0.3 point, down from last week when it averaged 3.87 percent. A year ago at this time, the 5-year ARM averaged 3.67 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

This is the best day to buy a house | Bedford Real Estate

Forget about hitting the malls this holiday season. You should ideally be closing on that new home, if you’re smart.

While the holiday season is notoriously known for being slow in the real estate world, most homeowners don’t realize that closing the day after Christmas could save you some serious cash.

According to a five-year study from data firm ATTOM Data Solutions, the best day of the year to close on a home is Dec. 26 because it could save you upwards of $2,500.

The group analyzed data of more than 18 million single-family home and condo sales over the past five years to determine which days of the year offer the biggest discounts.

“People closing on a home purchase December 26 were submitting offers around Thanksgiving and starting their home search around Halloween — likely not a common path to home purchase for most buyers and exactly why it’s the best time to buy,” Daren Blomquist, senior vice president with ATTOM Data Solutions, said in a statement.

Blomquist added that buyers and investors who are willing to start their home search right as stores are setting up for holiday decorations will likely face less competition and will be dealing with more motivated sellers, giving them the upper hand in price negotiations.

But Dec. 26 isn’t the only day to save. ATTOM found that the month of December holds seven key saving days. Those days include Dec. 7, 4, 29, 1 and 8. Other prime days to close throughout the year include Oct. 12, Nov. 9 and Feb. 9.

Here are the best 10 days of the year to buy a home.

1.       Dec. 26

Estimated savings: $2,500

2.       Dec. 7

Estimated savings: $2,000

3.       Dec. 4

Estimated savings: $1,823

4.       Dec. 29

Estimated savings: $1,320

5.       Dec. 21

Estimated savings: $1,223

6.       Dec. 1

Estimated savings: $1,000

7.       Oct. 12

Estimated savings: $1,000

8.       Nov. 9

Estimated savings: $666

9.       Feb. 9

Estimated savings: $500

10.     Dec. 8

Estimated savings: $149

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https://www.foxbusiness.com/features/this-is-the-best-day-to-buy-a-house

Real estate market worried | Bedford Real Estate

Home prices in the United States have never been higher. In January, housing values eclipsed their 2006 pre-crisis peak and since then have only pushed higher, according to the Case-Shiller home price index.

The culprits are a crazy tight job market, rising wages and the fact that the homeownership rate is rising again after bottoming in 2016.

But storm clouds are gathering as the Federal Reserve pushes interest rates higher, part of its ongoing fight to keep a lid on inflation. Higher rates weigh on home affordability — and thus depress demand. Here are three growing headwinds the housing market faces:

Affordability

Thanks to the resolve of Federal Reserve chairman Jerome Powell, who is resisting President Trump’s calls for a slowdown of the rate hike pace, monetary policy continues to tighten. That’s pushing up long-term interest rates, with the 30-year Treasury yield pushing back over the 3 percent threshold recently, up from less than 2.7 percent in December and a low of 2.1 percent in the summer of 2016.

afford.png

Looking at the 30-year fixed mortgage rate, rates are at 4.5 percent right now, up from 3.8 percent last September and lows around 3.3 percent in 2012 and 2013.

As a result of rising mortgage rates and higher home prices, Gluskin Sheff economists estimate that housing affordability has crashed to lows not seen since 2008, well off the highs seen in 2011 and 2012 when a combination of lower prices and lower rates helped put an end to the housing collapse.

Sales activity

A slowdown in new home construction during the housing crisis resulted in a backlog of demand for brand-new homes. Builders have responded to consumer appetite for newly constructed homes, which has helped pushed up the average price of a new home from a low of $250,000 in late 2011 to a high of $402,900 in December, before cooling slightly.

sales.png

But now sales activity is rolling over, threatening to break the recent trend of rising activity. Sales of existing homes has flatlined over the past year.

Demographics

Millennial homeownership rates are still poor, mired as they are with student loan debt and tepid wages.

According to the Urban Institute, the homeownership rate of millennials between the ages of 25 and 34 is about 8 percent below Gen X and baby boomers at the same age. If millennial homeownership matched previous generations, there would be 3.4 million more homeowners today, they estimate.

The risk is that the longer this generation delays homeownership, the more baby boomers looking to downsize will be pressured into lowering their home prices when they enter retirement.

Indeed, a study by Fannie Mae’s Economic and Strategic Research group warns of a “mass exodus” on the horizon as the “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.”

 

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https://www.cbsnews.com/news/3-reasons-to-worry-about-the-housing-market/

Core Logic: Mortgage rates average a 7-year high | Bedford Real Estate

Home prices continued to climb in May, according to the latest Home Price Index report from CoreLogica global property information, analytics and data-enabled solutions provider.

Home prices increased 7.1% nationally from May 2017 to May 2018, and increased 1.1% from the prior month, according to the report.

The chart below shows that home prices have increased moderately since 2013.

CoreLogic- July 4th

(Source CoreLogic)

“The lean supply of homes for sale is leading to higher sales prices and fewer days on market, and the supply shortage is more acute for entry-level homes. During the first quarter, we found that about 50% of all existing homeowners had a mortgage rate of 3.75% or less,” CoreLogic Chief Economist Frank Nothaft said. “May’s mortgage rates averaged a seven-year high of 4.6%, with an increasing number of homeowners keeping the low-rate loans they currently have, rather than sell and buy another home that would carry a higher interest rate.”

An analysis of home values in the country’s 100 largest metropolitan areas based on housing stock indicates 40% of metropolitan areas had an overvalued housing market as of May 2018, CoreLogic reported.

Another 26% of the top 100 metropolitan areas were undervalued, while 34% were at value. When looking at only the top 50 markets, 52% were overvalued, 14% were undervalued and 34% were at-value.

Several states posted double-digit increases in their 12-month price growth, including Utah at 12.9%, Washington at 12.8%, Nevada at 12.4% and Idaho at 11.2%.

The national home-price index is projected to increase by 5.1% from May 2018 to May 2019, according to the CoreLogic HPI Forecast.

The forecast is an econometric model that projects calculations from analyzing state-level forecasts, which are measured by the number of owner-occupied households for each state.

As of May, the report indicates that despite financial obstacles, there is a strong demand for homeownership.

“The CoreLogic consumer research demonstrates that, despite high home prices, renters want to get out of their rental property and purchase a home,” CoreLogic President and CEO Frank Martell said. “Even in the most expensive markets, we found four times as many renters looking to buy than homeowners willing to sell. Until more supply becomes available, we will continue to see soaring prices in cities such as Denver, San Francisco and Seattle.”

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https://www.housingwire.com/articles/43854-core-logic-mortgage-rates-average-a-7-year-high?eid=311691494&bid=2162019

Zillow 2017 real estate predictions | Bedford Real Estate

This year is nearly over, and 2017 will being in just a few short weeks. As the year comes to a close, predictions for next year are pouring in.

It’s hard to say what the new year will bring with the newly-elected President-elect Donald Trump. Zillow points out in its predictions how some of his policies could affect housing next year.

Here are Zillow’s six predictions for 2017:

1. Cities will focus on denser development of smaller homes close to public transit and urban centers.

2. More millennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States.

3. Rental affordability will improve as incomes rise and growth in rents slows.

4. Buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages, which could be worsened by tougher immigration policies under President-elect Trump.

5. The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing — putting them further from adequate public transit options.

6. Home values will grow 3.6 percent in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8 percent so far in 2016.

Relief from soaring home prices isn’t coming anytime soon | Bedford Real Estate

The US housing market is supply constrained, sending home prices in major US metros back to levels last seen in the winter of 2007.

Research out of JP Morgan published Thursday indicates that this situation appears unlikely to resolve itself anytime soon.

“Nationwide house price indexes have been pushing steadily higher—real house prices are now 25% above their 2012 trough and at the highest levels on record outside the pre-crisis boom years,” JP Morgan’s Jesse Edgerton writes.

“One might wonder if these high prices reflect growing demand that could soon elicit a wave of construction that would prove our forecasts wrong. We find, however, that high prices are concentrated in markets where supply is constrained by geography or regulation, suggesting there may be little room for additional construction.” (Emphasis added.)

In short, areas seeing home prices rise fastest — think San Francisco, San Jose, and Denver — are not in a position to meet the demand for housing implied by the rise in prices.

The problem here is two-fold.

As the chart below shows, high home prices haven’t influenced the aggressiveness with which homebuilders have added to the housing stock over time. This indicates the supply side of the market is content to accept elevated prices even if the volume of homes built and sold is below what the demand side alone might dictate.

View photos

Additionally, Edgerton’s work shows that markets equipped with both high home prices and an ability to meet the demand implied by these prices literally do not exist.

“Metro areas in the upper right quadrant of the chart would be the best candidates for a demand-driven construction boom,” Edgerton writes. “Unfortunately, sharp-eyed readers will note that there are no dots in the upper-right portion of the figure.”

View photos

Edgerton adds, “Thus, it is unclear how much we can expect high prices to drive construction in the coming years, as the data show that high prices are concentrated in areas where supply may be limited in its ability to respond to demand.”

Data out this week from S&P/Case-Shiller showed home prices rose 5.3% nationally in August, up from a 5% annual gain seen the prior month.

A report from the National Association of Realtors last week showed a 5.6% increase in median existing home prices, the 55th straight month of year-on-year gains. At the current pace of existing home sales, there exists just 4.5-months’ supply in the US market.

“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in,” chief economist for the National Association of Realtors Lawrence Yun said in a report.

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http://finance.yahoo.com/news/relief-from-soaring-home-prices-isnt-coming-anytime-soon-174136415.html?_fsig=arxQ.NYjpRCtxgAPQstl9A–