We could also revert to the historical payment ratio median, which would mean home prices go up about 22% even with no rent and income increases in 2017. And using the historical average rather than median, plus assume rent and income growth of 5%, we would see prices go up about 40% in 2017.
That won’t happen without loose lending, so instead we will have ultra low inventories in 2017 because prices are below fundamentals and stuck going up about 7-8% a year as banks keep using conservative comps when lending.
Trump could well loosen up money soon if he wants a boom, in which case those 20+% increases could happen again, as well as overshooting their fundamentals. I think that is more likely to happen in 2018 however.
The “flat prices” scenerio mentioned needs to explain how that will happen with inventory levels that in the past here and elsewhere in the USA are associated with strong price growth.
