Whether you are thinking of buying or selling a home, what’s going on in the real estate market should be one of your primary concerns. According to recent data, there is a home price surge taking place that could impact buyers, sellers, and homeowners alike.
In the past year alone, home prices jumped 30% in Austin, 23% in Phoenix, and 20% in Salt Lake City. That’s quite an increase in a struggling economy, considering the biggest gains during the start of the 2008 recession were only about 3% in Houston.
So why is this home price surge happening, and will Americans soon be priced out of the real estate market? While no one knows for sure what the future holds, here are a few possible reasons we are seeing an uptick in real estate prices.
Before anyone knew what COVID-19 even was, roughly a dozen large U.S. markets added jobs to the economy at an annual rate of over 3%, including Austin, Boise, Dallas, Phoenix, Salt Lake City, and Raleigh. Even the pause in growth we had with COVID isn’t enough to catch up with the massive demand for housing in those markets.
Incredibly Low Interest Rates
When mortgage rates dropped to under 3% in an effort to stimulate the economy, it worked in the real estate sector. Tons of homebuyers and investors jumped off the sidelines to purchase property, whether as first-time homebuyers, investors, and purchasers of move-up or second homes.
The California Effect
California experienced a long period of prosperity that included a run-up in home prices. When homes became unaffordable, people began leaving in droves to more attractive markets like Portland, Austin, Boise, and Salt Lake City. Many left California with a ton of equity to spend on new homes. That buying power is driving up prices in some of these markets.
It might not be fair, but COVID-related job losses have hit lower-paid workers harder than those making higher wages. The people with greater wealth can still afford to buy homes.
That said, the pandemic has also encouraged some families to relocate to less populated areas, prompting price increases in unlikely places like New Haven, Allentown, and Buffalo. At the same time, some people who otherwise might have sold or moved to new jobs have chosen to stay put, and there are fewer homes on the market, creating a supply issue. That supply issue is compounded by troubles that many contractors and home builders have experienced with labor and materials shortages over the past year.
It’s Still a Great Time to Buy or Sell a Home
Even though home prices are on the rise, that shouldn’t hold you back from following through with your home buying or selling plans. No one knows what the future holds for the national or local real estate markets, so it’s best to do what is right for you and your family, considering the current conditions.
The Lafayette Team provides professional real estate representation to buyers and sellers throughout the Lake Murray, SC area. We have over 17 years of combined real estate experience and know this area intimately. If you’re selling, our real estate professionals will put your home in the best possible light. And, if you’re buying, we’ll help you find the home of your dreams in even the most challenging market.
Contact us today to learn more about our services.