Is the current surge in home sales a (dangerous) repeat of the past?

We saw a surge in home sales back in 2003-2005 (and beyond) with a 26% increase in the pace of sales in a two year period.  Let's see how that compares to more recent years....



As shown above, if we finish out 2016 with 1300 home sales (which seems likely) we will have seen a (somewhat) similar surge in home sales with a 20% increase over a two year period.

Hmmmm --- should we be worried?  After the real estate boom of the early 2000's, we saw a significant bust. 

Let's look further....



As shown above, between 2003 and 2005, home prices were increasing RAPIDLY -- with a 33% increase in a two year period.  This, it turned out (surprise, surprise) was NOT sustainable.  Family income was not increasing by 33% in that same two year period, so families (and individuals) were spending a greater and greater share of their income on housing.  This rapid increase in prices was a large contributing factor to why prices (and the pace of sales) then started to decline in 2007 +/-.

So, are we seeing that same rapid run up in prices?



And --- no!  Which is GOOD news!  We have only seen a 8% increase in the median sales price over the past two years, which I believe means that the recent increase in the pace of sales is not an indicator that this is a boom that will be followed by a bust.

What's your take on this data?  Email me at scott@HarrisonburgHousingToday.com with your thoughts or questions.