Home prices increased in November, with national home prices up 0.70 percent month-to-month and 6.20 percent higher year-over year. Case-Shiller’s 20-City Home Price Index rose by 0.70 percent in the three-month period ending in November; nationally, home prices grew 6.20 percent year-over-year.
Seattle, Washington held first place in home price growth with a year-over-year increase of 12.70 percent. Las Vegas, Nevada home prices followed with year-over-year home price growth of 10.60 percent. San Francisco, California home prices grew by 9.10 percent year-over-year. Slim supplies of homes for sale drove rising home prices and sidelined would-be borrowers as affordability remained out of reach.
Home Prices Get a Pre-Recession Do-Over in Some Cities
David M. Blitzer, Chairman of the S&P Dow Jones Indices Committee, said that Los Angeles and San Diego, California along with Las Vegas, Nevada and Miami, Florida are repeating fast-paced price gains that they had prior to the recession.
Mortgage Rates, Building Costs Impact Supply of Homes and Affordability
Combined effects of high mortgage rates and rapidly rising home prices could dampen buyer enthusiasm over time, but the time-worn proclamation that what goes up must come down has not applied to home prices in high demand metro areas. Home buyers may rush to close their home loans before rates rise, but more buyers may delay buying a home due to few options, higher home prices and rising rates.
Lower taxes and rising wages may encourage renters to buy homes, but home prices continued to outstrip income for many potential buyers.
Building more homes is the only relief in sight for low inventories of homes for sale, but builders face rising materials costs, shortages of lots suitable for building and insufficient workers. Other factors impacting home building and buying homes include poor weather in some areas during December, and further shortages of homes caused by natural disasters in 2017.
2018 may see high-priced local areas develop affordable homeownership programs as current prices continue to rise above interested buyers’ financial resources.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.