Thursday, April 18, 2013
Wells Fargo Housing Chartbook - March
We have raised concerns over the past few months that the influx of investors into the housing market may be exaggerating the extent and magnitude of the recovery in home sales and home prices. Much more has been made of this issue in recent weeks, and some headlines have even raised the specter of another housing bubble. While some markets and submarkets have a bubble feel to them, we see the more likely outcome as a bubble within the bust that supports a temporary spike in home prices. As interest rates increase, the risk-adjusted returns offered from converting single-family homes to rentals will diminish, and investor purchases will likely recede.