Housing Price Appreciation is Accelerating

Filed under: Market Comentary

Yesterday, a new housing report came out – it was another doozy in the housing market. The numbers show that nationally we are up more than 13% year-over-year. That’s higher than it was last month, which means that things are accelerating faster. That’s way it usually is in the real estate cycle this time of year.

Comparing Trends: 2005 vs 2021

This is the largest acceleration in housing prices since 2005 – when the market went crazy before the nose-dive.

It sounds a little leery to hear today’s reports, but the current housing market looks quite different than what we had in 2005. I do not think it will continue at this pace forever. But the circumstances are pretty different in terms of inventory and the amount of equity people have right now.

Time will tell, but I think there are a lot of factors that will stop us from going into a big nose-dive.

Consistent Trends Across the Country

The other noteworthy thing is that all 20 markets in the report (all in the United States) are up year-over-year. One of them is San Diego County here in Southern California – which is up 19.1%, followed by Seattle at 18.3%. The #1 in the nation is Phoenix.

There is craziness across the board in the real estate market. I’m continuing to hear stories from friends in the industry about what is happening out there. For example, my friend was the agent on a home that was listed for $640,000 and they received an all-cash offer for $750,000. It’s definitely a competitive market for buyers right now.

How Will Things Play Out?

It’s going to interesting to see how everything plays out. We are starting to see the affordable end of the range stretching further away. As a result, first-time homebuyers are going to have a harder time breaking into the market and we’ll see people who have to get out of the market. Unfortunately, some of those houses will get picked up by investors – who are taking advantage of the high rent prices right now. Both housing prices and rent are rising together, significantly.

The market is as hot as everyone is saying. Who knows when it will change? Typically, change happens based on a catalyst that no one saw coming – and it happens fast. In the meantime, the metrics look healthy. Rest assured knowing that there are still ways to get into the market if you are ready. Reach out to talk to me about your financing options.

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