Home prices are rising at levels not seen since the real estate boom, but American homeownership remains on the decline. Currently the three areas serviced by The Cascade Team are in the top 13 metro markets in the US; Seattle, San Diego and Phoenix topping the list with a 12 month increase of 23%.
The two trends underscore the nature of the housing rebound: Gains in pricing have been driven significantly by investors; especially in the Phoenix housing market, leaving many would-be buyers behind.
Home prices are rising because of strong demand, a lack of supply and a sharp recovery in the hardest-hit markets. The number of foreclosed homes coming to market has also dropped dramatically. But because lending standards remain tight, the everyday home shopper is often losing out to investors able to pay cash.
"What we are seeing right now is definitely not normal," said Jed Kolko, chief economist for real estate website Trulia.com.
The number of homes for sale has not only been constrained by the drop in foreclosed properties, but also the low level of building over the last several years. This has also diminished supply, as has the fact that many borrowers remain stuck underwater, owing more on their homes than the market value; many of these home sellers are unable to get the prices they need to sell their homes.
The Standard & Poor's/Case-Shiller home price index of 20 American cities rose 0.3% in February over the previous month and was up 9.3% over February 2012. It was the ninth consecutive annual increase in the closely watched index and the best annual improvement since May 2006.
However in markets like Seattle, San Diego and Phoenix, we are seeing home owners now getting their heads above water as prices are rising and those housing markets are turning more in the sellers favor. The pace would not appear to be sustainable, but it will be interesting to see if as more sellers are above water, that inventory will climb and come more in line with demand. This should create some balance in the market and slow things down to a more reasonable pace.
Home Prices Still Rising
Home price changes in February compared with a year earlier:
Portions of the post were used from and article by Alejandro Lazo, Los Angeles Times. To read the complete article, click here.