The US housing bubble becomes unstoppable
The housing bubble in the United States is accelerating unstoppably to the point that the growth of housing prices has already pulverised the records reached in the previous rampant bullish phase that occurred in 2005 and 2006. In June, the valuation of flats registered an increase of 19.08% in year-on-year rate, which has meant an acceleration of almost two points compared to the 17.14% increase recorded in the month of May.
The market is moving at Formula One pace. No brakes, no reverse gear. The digital newspaper ZeroHedge points out that house prices "are rising at the fastest pace on record". The previous time such a bubble occurred was the prelude to a global crisis, from which the world took years to recover.
The barometer used to measure the rise in the cost of housing is the Case-Shiller index, which is based on real estate prices in the 20 largest cities in the United States. This index has been developed in collaboration with Standard & Poor's since 1987 and was set at 100% in 2000. The fathers of this reference are the economists Karl Case and Robert Shiller, who have calculated price rises as far back as 1890.
The records of some cities are alarming. "The price in Phoenix has risen by almost 30%, followed by San Diego, Seattle, San Francisco, Tampa, Dallas and Miami, which have price increases of 20%. Meanwhile, Charlotte, Cleveland, Dallas, Denver and Seattle all post their highest gains over the past 12 months," notes ZeroHedge.
All twenty cities in the index have posted double-digit price increases, providing further evidence for the visionaries who anticipate economic catastrophe on the other side of the Atlantic. More fuel to the fire of inflation and for those who attribute all the responsibility for rising prices to the inflationary "free" money policy of the Fed, the US central bank.
In the case of housing, price growth is the fastest on record and represents a return to the levels seen in the 1988 crisis. June's record is also the third consecutive monthly record set by this barometer.
There is also an S&P CoreLogic Case-Shiller index in the National Composite version, which rose by 18.6% in June. This is the highest rate in 30 years. Moreover, the National Composite Index marked its thirteenth month of gains. It is advancing at a frenetic pace, with a monthly acceleration of two points. In May it rose by 16.8% and in April by 14.8%. Prices are at record highs in all cities except Chicago.
"We have previously suggested that the strength in the US housing market is being driven in part by the reaction to the COVID pandemic, as potential buyers move from urban flats to suburban homes. The June data are consistent with this hypothesis. This increase in demand may simply represent an acceleration of purchases that would have occurred anyway over the next few years," said Craig J. Lazzara, Global Head of Index Investment Strategy at S&P DJI.
