What's the first rule of housing bubbles? Don't talk about them

Hey! It’s?Tuesday May 17, and today we’ve got a double dose of realtalk, first from an economist who sees the?market shifting away from heavily-favored sellers ?(though not with the outcome you might expect), and then from Inman columnist?Bernice Ross, who advises on how to have the tough conversation about?cutting price with your clients . Even if the sun is still shining brightly in your market, it can’t hurt to give both a read.

First rule of housing bubbles? Don’t talk about them, economist warns

THE NEWS: ?What started out as a rather staid academic exercise ended up turning heads across the real estate industry with its rather bold conclusion. We could be in the?early stages of fueling a new housing bubble, a team of researchers working with the Federal Reserve Bank of Dallas?proposed ?a little over a month ago. According to their telling, ballooning home price growth may have been spurred, in part, by a shared belief among buyers that prices would only continue to go up, regardless of the rental income those properties could produce, or other key economic indicators.

Since late March, many in the real estate industry have discussed the report, but not everyone is buying it.?Jeff Tucker, a senior economist for Zillow, is one of the skeptics. The market is reaching an inflection point as dynamics start to shift away from heavily-favored sellers, he?wrote last week . Tucker doesn’t expect that shift to result in widespread home-price reductions. For one thing, demand for homes is likely to be more resilient than the Fed researchers accounted for, he argued.

“If prices did begin to fall, we know there are millions of stymied first-time buyers, or younger millennials soon to be aging into that situation, waiting in the wings to snap up homes if they see a bargain,” Tucker wrote.

Instead, Tucker worries that talk of a “bubble” could actually hurt future buyers, who need homebuilders to continue producing new inventory.?—Daniel Houston

Read the full story here.

‘Time for a price reduction’: Having the tough conversation with your sellers

Overpriced listings are an issue in any market, but with?talk of a recession ?looming ahead, not to mention a?rapidly shifting ?market, the ability to persuade your sellers to reduce their price is more critical than ever. The good news is that tried-and-true strategies still work, but there is also a whole new set of AVM-based tools that make it much easier to persuade sellers to reduce their price when needed.?

Since late last year, my gut has been telling me that the next major downturn is around the corner. When I look at the demand, the demographics showing that millennials have hit the prime age where they purchase homes, and the failure of the market to provide enough new housing to meet that demand, the numbers totally contradict what my gut keeps saying.?

Read Bernice Ross’s full column here.