- According to realtor.com, median home prices surging
- Median home prices +4.3% y/y
- Median home list price was $330,000, according to most recent realtor.com data
Last week, the powers that be declared the economy to be in an “official” recession. If that’s the case, how can median home list prices keep going up?
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George Ratiu, realtor.com Senior Economist, said, “The big surprise of the housing market is that prices have remained quite resilient.” Nationally, the median home list price hit $330,000, an increase of +4.3% y/y. Though not the typical +5% – 6% price appreciation rate the housing market usually sees during the summer, this +4.3% increase brings median home list prices quite near the appreciation rate of +4.5% we saw just before the COVID lockdowns went into effect.
The answer to this conundrum concerning increasing home prices during an official recession is lack of inventory coupled with increased demand from buyers. According to realtor.com, the total number of listings during the first week in June was down -25% from last year when there was already a housing shortage. Even compared to the first two weeks of March, listings of for-sale houses had fallen -16% annually.
Unlike the Great Recession when house prices tanked, “the number of listings is shrinking at a faster pace, and it’s causing prices to go up,” said Ratiu. And, again unlike the Great Recession, “the (housing) market isn’t in the dire straits that it was the last time around.”
Simultaneously, potential buyers who still have jobs are wanting to take advantage of all-time low mortgage interest rates. Interest rates fell to 2.94% for a 30-year fixed rate loan last Thursday, according to Mortgage News Daily.
Lawrence Yun, chief economist with the National Association of REALTOR® (NAR), weighed in on this record-low interest rate, escalating home list prices, record-low inventory housing market about what potential buyers might expect. Yun said, “For most people it will be a competitive buying market. For lower-priced and medium-priced homes, multiple offers (bidding wars) will be fairly common. On the luxury end, some price reduction will be required because there’s plentiful inventory (in this sector of the market).”
Thanks to realtor.com.
Also read: Could Owner-Renter Hybrid Help Owners Keep Their Homes & Help Millennials Own One?, Podcast: Good News For Housing And Economy? | Top 5 Headlines Worth Celebrating, 5 Cities with Good Investment Potential in 2020