No Bubble in U.S. Home Prices - NY Fed Economist

The rise in home prices in the United States in recent years reflects fundamental factors and is not evidence of a housing bubble, an economist at the New York Federal Reserve said on Wednesday.

Richard Peach, vice president in the Business Conditions Function of the New York Fed, said his research showed there was little evidence to support the existence of a national home price bubble.

Peach said home prices appeared to have risen in line with increases in personal income and declines in nominal mortgage interest rates and not because home buyers were hoping to cash in on even higher housing prices in future.

“There is no housing bubble,” Peach told a business group in New York. “We are seeing a structural change where low interest rates, rising incomes and people’s preferences have led to greatly elevated asset prices, or the value of the income flow from this asset called a house.”

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