According to official reports, the median
existing-home price in the U.S. reached $236,400 in September 2016. That mark
for all home sales was significantly higher than the previous peak of $230,400
we experienced in July of 2006 – more than a decade ago.
Our current $236,400 median home price
was also up 6.5 from just a year earlier for the same month in 2015.
In other key measures, For Sale
properties stayed on the market for only 34 days this summer (June), which was
the lowest Days-On-Market on record since the National Association of Realtors
began tracking that statistic in May 2011. In fact, 47 percent of all homes on
the market sold in less than a month during June of 2016, according to NAR.
It’s even more good news for sellers of a
non-distressed home, as those were snatched up in a median of only 33 days,
while short sales (129 days) and foreclosures (39 days) lagged.
Speaking of distressed sales, short
sales, foreclosures and other bank-owned properties constituted just 8 percent
of sales this past summer, down from 11 percent the year prior. All-cash sales
– another key indicator of a fledgling housing market and distressed sale
volume – dropped to just 22 percent of all home purchase transactions, which
was down 10 points from 32 percent a year ago.
According to Lawrence Yun, chief
economist at the National Association of Realtors, last year’s spring home
buying season was the strongest on record since before the financial crash and
recession.
"Buyers have come back in force,
leading to the strongest past two months in sales since early 2007," said
Yun. "This wave of demand is being fueled by a year-plus of steady job
growth and an improving economy that's giving more households the financial
wherewithal and incentive to buy."
Yun seems spot-on when he points to
economic trends – not just a hot seasonal spring market – that are driving home
prices. In fact, total sales of single-family homes, townhomes, condo, and
co-ops jumped 3.2 percent during June, to a seasonally adjusted rate of 5.49
million – almost 10 percent higher than the previous year.
The growth in the U.S. real estate and
housing market has largely come in the last half decade, not incrementally
since 2006.
“A lot of that recovery has come in the
last four years as the economy has strengthened and created more higher-paying
jobs,” stated Taimur Khan, senior research analyst at Knight Frank, the firm
that first produced the report on median home values jumping higher than 2006
levels.
But what we’re experiencing with higher
home prices may also be attributed to a case of the rising real estate tide
lifting all boats. While sales showed the highest pace since February 2007
across the entire U.S, with all major regions moving higher in June, there are
still certain markets that are red-hot, bolstering the median price numbers.
In fact, NAR’s president, Chris
Polychron, points to “drastic imbalances of supply compared to buyer demand in
several metro areas, most notably in the West.”
The biggest home price pushes have been
in the most expensive metro areas like San Francisco, San Jose, Los Angeles,
and even Sacramento, dragging up the national average with them.
However, the economic recovery and home
prices are not quite as rosy in other areas of the country. According to
Realtor.com‘s chief economist, Jonathan Smoke, median home prices still
haven’t reached pre-2006 levels in 35 of the country’s largest metro areas,
including Stockton, Ca, Las Vegas, Phoenix, and some parts of Florida.
Smoke also points to the fact that home
prices may be on the steady rise nationally, but haven't "recovered on a
real or inflation-adjusted basis." Due to inflation, a home sold for $1 in
2006 is really $1.20 these days, Smoke illustrates, so home prices may be a
little less hot than they first appear, not really catching 2006 levels.
Despite this caution, home values
continue to be bolstered by a fundamental economic principle of (lack of)
supply and demand. In fact, the number of homes for sale across the U.S. sits
at near historically low levels, with only 2.30 million existing homes for
sale, with housing inventory only 0.4 percent higher than a year ago.
“When the right type of single-family house in
the right area comes to market, people want to buy that home because they might
not get that opportunity again,” adds Taimur Khan of Knight Frank. No matter
how you look at it, the fact that home prices have jumped above pre-recession
levels is an encouraging sign – and presents grand opportunity for home sellers
in the Sacramento and Northern California region
