Homeowners Rejoice as Housing Prices Reach All-Time Highs in Two-Thirds of US
Two-thirds of U.S. cities saw housing prices reach all-time highs in the fourth quarter of 2017.
Single-family home prices reached a 64 percent peak in metropolitan areas, an increase of 5.3 percent from the previous year, according to Bloomberg.
The national median price for these single-family homes was $247,800, according to The National Association of Realtors.
The National Association of Realtors surveyed 177 regions for their measurement of metropolitan areas.
Of those areas measured, 15 percent saw double-digit price increases.
“A majority of the country saw an upswing in buyer interest at the end of last year, which ultimately ended up putting even more strain on inventory levels and prices,” Lawrence Yun, NAR’s chief economist, said.
“Remarkably, home prices have risen a cumulative 48 percent, yet during this same time frame, incomes are up only 15 percent. In the West region, where very healthy labor markets are driving demand, the gap is even wider.”
Yun added that the growing housing prices “have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation.”
“However, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”
At the end of 2017, there were only 1.48 million homes for sale, a 10.3 percent drop from the year before.
Soaring home values show an improvement in the job market and a positive impact of the new tax law.
“While tight supply is expected to keep home prices on an upward trajectory in most metro areas in 2018, both the uptick in mortgage rates and the impact of the new tax law on some high-cost markets could cause price growth to moderate nationally,” Yun said.
He added, “In areas where homebuilding has severely lagged job creation in recent years, it’s going to be a slow slog before there’s enough new construction to cool price appreciation to a pace that aligns more closely with incomes.”
The U.S. economy is about to benefit from an “investment boom” thanks to the tax legislation, economist Larry Kudlow said in a radio interview last week.
Kudlow — who served as a senior economic adviser on the Trump campaign — then suggested that the tax reform legislation is the reason the U.S. is once again turning into a nation where companies actually want to do business. The legislation benefited businesses by cutting the corporate tax rate from 35 percent to 21 percent, meaning they have less incentive to move their operations overseas.
“America is once again becoming the best investment environment in the world — the best country in which to do business,” Kudlow said. “And that’s a powerful positive.”
The most expensive housing markets were in San Jose, Calif. where the median price was $1.27 million. The area saw a 26 percent price increase, the largest of any region.
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