As a real estate agent, the range of your listings or homes sought by clients can range from large homes in gated communities to properties on the low end of the market.
Supply and demand always dictates home prices and a shortage of houses continues to impact today’s market. According to a CNBC report, that shortage is worst at the low end of the market, which is why prices in that tier are rising at twice the pace of those on the high end of the market.
According to the recent S&P Case-Shiller Index, home prices jumped 6.2 percent in September compared with September 2016, accelerating from the annual gains in previous months, according to the S&P Case-Shiller Index.
According to the index, prices have now recovered nearly 46 percent from the trough of the housing crash back in early 2012 and are nearly 6 percent higher than the peak of prices in 2006.
It goes without saying that all real estate is local. That is one of the clichés every agent knows. With that in mind, prices rise more quickly in some markets than others.
The low end of most markets is where the most demand is, as millennials age into their homebuying years. It is also where the least supply is.
Moreover, during the recession, builders cut production by more than half their normal output, and they have still not recovered fully.
According to a survey by Zillow shows the difference in home price appreciation on the high end of the market versus the low end. The high end is defined as the top third of the market by price and the low end is the bottom third by price.
Svenja Gudell, chief economist at Zillow, pointed out that the housing supply on the high end of the market is much greater, and the supply in the middle of the market, which is where most of the homebuilders target, is growing, but there is not much hope for supply on the low end.
“The past two months have shown promising signs of life from builders that have had difficulty meeting this intense demand in the face of rising land, lumber and labor prices. But it’s going to take a lot more than two good months to fully erase the housing deficit we’re facing after years of underbuilding.”
Looking at some selected markets, annual price appreciation year-over-year ion the low end has outpaced the high end dramatically. Cities, with their high-end and low-end appreciation year-over-year include New York, 3.7 percent, 8.4 percent; Los Angeles 5.6 percent, 7.6 percent; Chicago 1.6 percent, 6.6 percent; Boston, 4.5 percent, 8 percent; Dallas 4.7 percent, 9.4 percent; Miami 2.1 percent, 9.6 percent; Detroit 5.1 percent, 20.3 percent; Atlanta 4 percent, 13.2 percent; Washington, D.C., 0.8 percent, 3.8 percent; and San Francisco 5.2 percent, 9.1 percent.
