....."For six straight months, home prices have been leaping in double digits from a year ago. In May, the median existing home sale price was 15.4 percent higher nationally than May of 2012, according to a new report from the National Association of Realtors.
The Realtors themselves say that kind of jump is "unsustainable."
"Some of the increases can be explained by the fact that it is recovering from an over-corrected situation," said Lawrence Yun, chief economist for the Realtors. "But with people's income rising at only 1 or 2 percent and prices rising in double digits, it cannot continue."
If the chief liar himself, Larry Yun, agrees.... then it must be really be "unsustainable"!!!
......""These are huge moves especially considering—when purchasing a house using a mortgage—most people buy based on 'monthly payment and the maximum allowable debt-to-income ratio.' This means first-timer share will fall even further. "
....."First-time homebuyer participation was at just 29 percent, according to the Realtors, a five-year low. Without these buyers, as investors pull back and prices rise, home sales will likely lose steam."
I agree that the future rise in house price is going to be muted for the following reasons. Infact we may see apullback of a few percentage points.
1. Higher interest rates will curb the price
2. Income increase per household is only increasing at 1-2%
3. Construction cost which rose dramitically earlier are now back to normal. Hence the builders are competetive again.