Below is an excerpt from an article in Kiplinger’s Personal Finance
More buyers are looking for a home than at any time since 2013. Skylar Olsen, Zillow‘s director of economic research, says demand for homes has increased over the past five years as a result of strong economic growth as well as low mortgage rates and more millennials entering their thirties and “approaching peak home buying ages.” (According to a recent report from the National Association of Realtors, the median age of first-time home buyers is 33.)
Furthermore, a large cohort of baby boomers are buying and selling, as many boomers downsize for retirement. Adding to the big squeeze on buyers is a huge housing shortage: The number of homes in the U.S. listed for sale on Zillow in December was down 7.5% from the previous year and is at the lowest level ever recorded by the company. The U.S. housing market is facing an undersupply of homes for sale of 3.8 million, which is driving up home prices and putting pressure on housing affordability, says George Ratiu, Realtor.com‘s senior economist.
While buyers are dealing with limited supply, home sellers—and homeowners with no plans to move anytime soon—are reaping the rewards. Home values climbed in 2018 before hitting the pause button starting in spring 2018 because of higher mortgage rates. But home price gains picked up in the second half of 2019 as mortgage rates retreated again. The median price of existing homes depends on who’s calculating it. According to Attom Data Solutions, a property database provider, the median home price increased 6.2% in 2019, hitting an all-time high of $258,000. According to Clear Capital, which supplies average home prices for metro areas across the U.S., home prices rose 5.7% in 2019, compared with an increase of 7.4% in 2018. Clear Capital says the median sales price of a residential property was $253,000 in December 2019.
How high will home prices go this year? Kiplinger expects a 3.6% rise in 2020. December marked the sixth consecutive month of year-over-year increases, reversing the trend of decelerating price growth that began in March 2018 and ended in July 2019. Home prices are nearly 60% above the bottom they hit in February 2012 and are now 15% above their pre-crisis peak, on average.
For the complete report visit https://www.kiplinger.com/article/real-estate/T010-C000-S002-home-prices-on-the-rise.html