Will America’s housing boom lead to another financial crisis?

A FAVOURED PASTIMEDC. for city dwellers on holiday to quainter towns and villages is to peruse the windows of local property firms and dream of swapping their cramped two-bedroom flat for an entire house and garden. Your correspondent is not immune to the appeal: she gazed wistfully at a pretty house near the Deschutes river in Bend, Oregon, situated among the lakes and peaks of the Cascade mountains (pictured). She dutifully checked the listing price on Zillow, a real-estate platform, only to face grim reality: the three-bedroom house was worth $1.25m, a 44% increase from a year earlier, yielding a price per square foot higher than Queens and most of Washington, It is hard not to feel unease at the spectacle America’s housing market is making of itself. House prices have risen 13% on the year, the biggest jump since before the 2007-09 financial crisis. Inventories of homes for sale have plummeted: there are so few on offer in America that there are currently more agents than there are listings. The typical home sells in 17 days, a record low, for 1.7% more than its asking price, a record high. When Redfin, another property platform, conducted its annual survey of around 2,000 homebuyers, 63% reported having bid for a home they had not seen in person. The last boom in house prices was followed by a deep and painful recession. Is history likely to repeat itself?