There always have been a few locations where housing in the United States is extremely expensive: Downtown Manhattan, Vail and Aspen, San Diego and such.
But the prices have literally exploded because of economic circumstances that have developed under the Joe Biden administration, including a huge price increase for lumber and materials, low inventories following the mandated COVID business shutdowns, and low mortgage rates.
Kiplinger pointed out just months ago the combination of some of those factors left the housing market “molten hot.”
The report said at that time the 15 U.S. cities with the highest average prices “have an average home price of $1.1 million.”
And these are ordinary cities, not exotic resorts. For instance, Anchorage, Alaska, was reporting an average home price of $585,500, Portland, Oregon, was at $617,776, Boston was nearly $800,000, Oakland, California, $843,314, Los Angeles, $904,318 and Brooklyn, New York, $1,258,150.
Now Reuters is warning that if you don’t now own, your purchase had better be soon or the costs will be at least another 10% higher.
The report said there is expected to be double digit increases in home prices again this year – after a hike over the last year of figures approaching 20%.
“The Feb. 8-28 poll of 33 property analysts suggested U.S. house prices would rise 10.3% this year. That was an upgrade from 8.0% in the December poll, suggesting underlying demand for housing is still strong and housing supply is still tight,” the report explained. “Prices are forecast to rise 5.0% next year and 4.1% in 2024, marginal upgrades compared with 4.0% and 3.7% in the last poll.”
“The recent pace of home price increase is clearly unsustainable,” Brad Hunter, head of independent consultancy Hunter Housing Economics, said in the report. He expects just under 8% house price inflation this year, followed by 4.1% in 2023.
CNBC reported just this week that Russia’s attack on Ukraine was producing the side effect of moving mortgage rates even lover.
It was at 3.9% on Tuesday.
“This will give homebuyers more purchasing power as the historically busy spring season kicks off. It will also keep record high home prices continuing on their run higher. Prices in January were 19.1% higher year over year, according to a report released Tuesday by CoreLogic. That level of growth is the highest in 45 years, when CoreLogic began tracking prices,” the report said.
An online search for “cheap” homes in one foothills area west of Denver, but within commuting distance, produced only a handful of results with prices up to about $300,000. But actually those offerings were for vacant land only, no driveway, power, well or septic and certainly no buildings.
Actual homes in that area included one middle-sized tract home with a two-car garage for $729,000. One home recently closed there at a price of $584 per square foot.
The Houston Chronicle said homes in the Dallas area were up 21.7% in January over the previous year.
The report noted, “The top three state with the most home price growth in January were Arizona (28.3 percent), Florida 27.9 percent) and Utah (25.2 percent).”
Forbes reported this week Naples, Florida, at 38.9% and Punta Gorda, Florida, at 38.3% were the cities with the highest increases.
In the hottest markets homes for sale almost always were under contract for higher than their asking price.
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