Home prices are rising because of short supply
Home prices are finally showing substantial increases. The National Association of Realtors recently issued a report on this emerging trend. Home prices posted a strong growth in closing out the final quarter of 2015, despite a moderating pace of sales, according to a new quarterly report released by the NAR.
The report summarized the price acceleration in major regional areas of the country:
"Northeast: Existing home sales rose 1.9 percent and are 7.3 percent higher than the fourth quarter of 2014. Median single-family home price: $254,500, up 3.7 percent from a year ago.
"Midwest: Existing home sales dropped 6.9 percent but remain 5.2 percent higher than a year ago. Median single-family home price: $171,600 - 6 percent higher than a year ago.
"South: Existing home sales fell 4.1 percent and are 0.6 percent below a year ago. Median single-family home price: $195,400 - 6.6 percent above a year earlier.
"West: Existing home sales dropped 10.4 percent in the fourth quarter but are 2.1 percent higher than a year ago. Median single-family home price: $323,600 - 8.4 percent higher than a year ago.
"NAR reports that the median existing single-family home price rose in 81 percent - or 145 out of 179 metro areas - of the markets tracked. Thirty metro areas - or 17 percent - posted double-digit price increases in the fourth quarter of 2015, which trumps the 12 percent of markets that saw double-digit increases in the fourth quarter of 2014.
"Even with slightly cooling demand, the unshakable trend of inadequate supply in relation to the overall pool of prospective buyers inflicted upward pressure on home prices in several metro areas," says Lawrence Yun, NAR's chief economist.
"As a result, homeownership continues to be out of reach for a number of qualified buyers in the top job producing, but costliest, parts of the country - especially on the West Coast and parts of the South.
"Nationwide, the median existing single-family home price in the fourth quarter of 2015 was $222,700 - which is up 6.9 percent year-over-year (prices averaged $208,400 in the fourth quarter of 2014).
"Meanwhile, total existing-home sales dropped 5.4 percent to a seasonally adjusted annual rate of 5.18 million in the fourth quarter - compared to 5.48 million in the third quarter. Existing-home sales still are 2.4 percent higher than the 5.06 million pace during the fourth quarter of 2014."
Q. Where are the most expensive home prices?
A. The priciest homes are located in the San Jose, California, metro area, where the median existing single-family price was $940,000; San Francisco, $781,600; Honolulu, $716,600; Anaheim-Santa Ana, California, $708,700; and San Diego, $546,800. This was recently reported by the National Association of Realtors.
Q. Is another housing bubble forming in some markets?
A. Here's the view of real estate consultant John Burns, addressing that subject:
"In 2013, fresh off the biggest housing downturn in their lifetimes, 73 housing industry executives compiled the Top 10 Signs of a Housing Market Bubble. We mailed each a poster for their walls, and we mark our poster when we see the signs.
"Nationwide, few signs are forming, but we are seeing four of the ten qualitative bubble signs in a few of the hottest housing markets."
Q. Are mortgage refinancing applications increasing?
A. Yes. Substantially. A major mortgage group recently released this report:
"Mortgage applications increased 8.2 percent from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey.
"The refinance share of mortgage activity increased to its highest level since February 2015, 64.3 percent of total applications, from 61.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.7 percent of total applications."
• Email Jim Woodard at storyjim@aol.com.
© 2016, Creators Syndicate