By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News, December 12, 2021
U.S. house market has been steadily growing over the past ten years – Photo credit : pixabay.
U.S. house prices rose 18.5 % from the third quarter of 2020 to the third quarter of 2021 according to the Federal Housing Finance Agency House Price Index (FHFA HPI). House prices were up 4.2 %compared to the second quarter of 2021. FHFA’s seasonally adjusted monthly index for September was up 0.9 percent from August.
“House price appreciation reached its highest historical level in the quarterly series,” said William Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “Compared to a year ago, annual gains have increased in every state and metro area. Real estate prices have risen exceptionally fast, but market momentum peaked in July as month-over-month gains have moderated.”
House prices rose in all 50 states and the District of Columbia between the third quarters of 2020 and 2021. The five states with the highest annual appreciation: 1) Idaho 35.8 percent; 2) Utah 30.3 percent; 3) Arizona 27.7 percent; 4) Montana 26.0 percent; and 5) Florida 24.8 percent. The areas showing the lowest annual appreciation: 1)District of Columbia 8.0 percent; 2) North Dakota 10.5 percent; 3) Louisiana 10.9 percent; 4) Maryland 12.5 percent; and 5) Iowa 13.0 percent.
In Q3 2020 house prices were up 8.22%, compared to Q3 2019. In Q3 2019 house prices had increased by 5.00% from Q3 2018.
U.S. house market has experienced continuous price growth since the start of 2012. This phenomenon has been boosted by the quantitative easing policies (money supply policies) carried out by the U.S. Federal Reserve since November 2008.
Europe has the same inflation problem. The rate of annual inflation of the euro zone hit 4.9% in November, against 4.1% in October, 3.4% in September and 3.0% in August, according to Eurostat, the statistical office of the European Union. Housing prices were up by 6.8 % in the euro area and by 7.3 % in the European Union in the second quarter of 2021, compared with the same quarter in 2020, reported Eurostat.
Data over decades show that extensive monetary policies fuel inflation and assets bubbles. Stock price and housing prices steadily grow in quantitative easing times. That means that billions of dollars are injected in artificially increased house prices, instead of being invested in business and industrial productivity. Moreover, households are constrained to get into increasingly heavy mortgages to buy an apartment or a small family-house. Therefore, real estate bubbles are not forever. Housing and rent prices in the U.S. would start to cool off in mid-2022, as a consequence of the expected bonds purchase taper of the U.S. Federal Reserve in the coming months.
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© Copyright 2021 – Swann Collins, investor and consultant in global affairs.