The ongoing strength in housing demand is also notably driving up rental costs. Higher house prices also make it much more difficult for lowto moderate-income households to become homeowners, as larger down payments and other financing requirements, in effect, lock these households out of the housing market.
Amid the booming real estate market, some bankers I spoke with recently cited concerns about a possible house price bubble and growing concerns about potential risks to financial stability. These concerns are a notable change from our conversations a year ago, when most bankers were appreciating the frenzied activity in this market as a means to boost income in a very lowrate environment.