Home-Price Gains Continue through 2nd Quarter
I found a recent article on National Association of Realtors (NAR) statistics for 2nd Quarter 2016 home sales interesting, particularly since I have been actively seeking a condo or townhome for a client in the local Dallas market. All I can say is, what a market! I have not seen or worked in a real estate market like this in my past 30+ years in the business. Inventory is so tight that Sellers believe they are sitting on a “prize”, and recent statistics indicate that might be the case. The appraiser in me crunches all the numbers, studies the trends of recent sales and estimates where the property should sell. All for naught! Current home pricing has nothing to do with recent sales prices. Sellers want to increase the asking price another 5% or more over recent sales, even if the last sale was next door and closed last week. Amazing!
Lawrence Yun, NAR chief economist, was quoted in the NAR article indicating the faster pace of home sales amidst low inventory levels has pushed home prices higher in many major markets across the US during the second quarter. “Steadily improving local job markets and mortgage rates teetering close to all-time lows brought buyers out in force in many large and middle-tier cities,” he said. “However, with homebuilding activity still failing to keep up with demand and not enough current homeowners putting their home up for sale, prices continued their strong ascent – and in many markets at a rate well above income growth.”
According to NAR 2nd Quarter 2016 statistics, the national median existing single-family home price in the second quarter was $240,700, a 4.9% increase from the second quarter of 2015 ($229,400), which was the previous quarterly peak.
It will be interesting to see if a potential rise in mortgage rates has any bearing on the runaway Seller market. Many homeowners have refinanced their homes in recent years with historically low interest rates. The inventory constraint could worsen if homeowners are reluctant to “let go” of their current low rate mortgage. Stay tuned, could get interesting.