More than Half of American Homes Are Overvalued, CoreLogic Warns

The comments below are an edited and abridged synopsis of an article by Tyler Durden

A history of economic cycles dating back to the mid-1800s reveals a troubling outlook for today’s central bank-induced bull market of hopes and dreams, which could be in the later innings.

Americans have stopped saving as their jobs have left them in financial ruin, and they are now being squeezed by the higher cost of living.

The charade of economic stability could continue a little longer, with the stealth QE program to Wall Street via debt-financed tax reform, which has produced a massive wave of more than $2.5 trillion in stock buybacks—a gift to corporate America.

The valuation of many financial assets is overextended, and evidence from CoreLogic shows that more than half of US residential real estate markets were overvalued in April.

CoreLogic reports that residential real estate prices nationwide increased 6.9% year-over-year from April 2017 to April 2018. Its Home Price Index also shows a 1.2% rise on the month-over-month basis from March to April 2018. This has sparked the debate of housing affordability across the nation, with many millennials struggling to achieve the American dream.

CoreLogic also showed that 40% of the 100 largest metropolitan areas were overvalued in April, compared to 28% undervalued, and 32% in line with valuations. Of the nation’s top 50 largest residential real estate markets, 52% were overvalued in April.

The current unsustainable pace of overvalued home-price appreciation throughout more than half of the US’s top real estate markets could soon hit serious resistance, as affordability becomes a more significant concern and the central bank-induced bull market comes to a close. This means that millennials who have recently purchased a home likely bought near the top.