Here’s a Way to Look at Housing Price Activity I Haven’t Seen Before

Filed under: Market Comentary

There’s no question at this point that housing prices are going up and up. But part of the challenge with looking at median home prices is that these increases can be a little misleading. Especially here in Southern California: when the high end of the market is so active, it can unnaturally pull that number up (since we’re looking at the middle).

So, if there are an abnormal number of sales in the highest prices ranges (such as over a million dollars), then it will have an affect on the overall median numbers for the area.

Local Real Estate Trends You Need to See

We have a proprietary report we run to look at local real estate trends – click here to download the report. This month, a new addition in the report looks at the average price of a home in a particular square footage range. For example, you can look at a 1700 square foot average in specific cities. There are also sections for 2500 and 3500 square foot homes.

If you are looking for a specific square footage, then this report helps us see what is happening with appreciation. These numbers are telling! Check out a few cities on here. Looking at the year-over-year numbers for 2500 square foot homes in our area:

  • Temecula is up 26.7%
  • Murrieta is up 25.9%
  • Canyon Lake is up 24.9%
  • There was only 1 city that wasn’t at least 20%: Desert Hot Springs came in at 17.5%. That number is still a LOT of appreciation year over year.
  • The highest appreciation in Riverside County was Palm Springs, which shows 36.1% appreciation year over year!

Appreciation: How Long Will it Last?

Appreciation is real! There is no question that the market is changing. How long will it last? In my opinion, at some point the appreciation will settle down. The biggest fear in this market is interest rates going up because of inflation – that will be a game changer.

The combination of current low interest rates and increasing appreciation have a lot of people jumping in the market at this time. At some point, people won’t be able to afford the homes and things will start leveling off.

If you have questions about buying or refinancing a home, then you are always welcome to reach out to me for more information.

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