Like many American cities, New York and Washington DC have experienced explosive housing prices since the crash of 2007. If fact, prices have risen so high that one might safely assume that we’re in the midst of another Fed induced housing bubble. However, all indications suggest that this bubble is close to bursting.
According to a recent study, the value of 45% of the single family homes in the New York and Washington DC metropolitan areas, fell by 2% between June of 2014 and June of 2015. In the previous year, only 15% of Washington homes and 20% of New York homes fell in value. Other cities like Los Angeles, Chicago and Phoenix, experienced a similar drop.
The falling prices seem to be caused by foreign buyers and other investors pulling out of the market, but that’s only half of the story. Wages for the average worker haven’t been able to keep up with booming prices, so without the contribution of investment buyers, the market is slowly deflating. As one of the researchers put it “What happens in any bull asset bubble such as what we’ve seen is you run out of buyers…It’s hard to get deals done if the bottom third can’t get a mortgage.”
It looks like economic reality is finally catching up to the housing bubble (again).
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Contributed by Joshua Krause of The Daily Sheeple.
Joshua Krause is a reporter, writer and researcher at The Daily Sheeple. He was born and raised in the Bay Area and is a freelance writer and author. You can follow Joshua’s reports at Facebook or on his personal Twitter. Joshua’s website is Strange Danger .