But of course, with all the signs out – low housing inventory, wage increases, surging housing demand – it’s hardly a guess.
Still, nothing validates a guess more than a good measure. With scarce available housing reaching a 20-year low, home prices inevitably go up, pushing affordability down. But that does not stop the demand.
Here’s what the trend looks like in various parts of the country.
The Valley
In Arizona, housing inventory dropped by 18.4 percent. While in 2012, there were 6,183 available starter homes in the market, now there are only 3,432.
The relationship between availability and price, of course, is in direct proportion, driven by demand and the near historic-low rates. So it is only expected for those same starter homes to increase in value.
Five years ago, you could buy one at an average of $69,300. Now you need more than twice that amount to buy it with a current median sale price of $155,633.
Trade-up homes are more expensive, but did not change as much as starter homes in value. In 2012, average sale price is at $129,967 while it is now at $231,996.
Still, there’s no shortage of demand and borrowers may even still find the current starter home median sale price appealing. Most are looking for homes deemed “affordable” within the price of $250,000.
New Mexico
Don Martindell of the Albuquerque Association of Realtors quotes their local housing market to be “very fast-paced right now.”
“As we kick off the season, Albuquerque and Rio Rancho remain a seller’s market,” Martindell adds.
There is a reported 23 percent increase in homes placed under contract in March compared to the same time a year ago. The number of sold single-family homes rose as well at an 8.4 year-over-year increase. The average sale price rose by 4.2 percent from the previous year, now at $187,500.
In high-end markets like Seattle, Boston, and San Diego, competition has driven a lot of pressure, with many people offering more for less.
What has driven the season’s two-decade low inventory?
Alex Veigaof the AP, reasons:
- people have been staying in their homes longer since 2008
- those who were able to take advantage of ultra-low interest rates are reluctant to replace their mortgage with one that carries higher interest rates
- those who do wish to sell, however, are hindered by their underwater mortgages
- some investment property owners take advantage from both the steady flow of income via rental payments, while also benefiting from the increasing home values – a setup too good to break with a sale
- a large chunk of investors own many properties and they usually keep the homes longer
- new constructions will take time to fill the current void
Despite the situation, however, borrowers are still willing to compete. But what will happen now that home prices are increasingly becoming less affordable for the large part of the borrower population? How will this impact the housing sector, in general? Answers are yet to be seen.
