We already knew prices had skyrocketed in New York City, San Francisco, and Honolulu. But it turns out plenty of other metro areas are seeing a serious rise in home prices, according to a report on Monday from the National Association of Realtors®. The news might put a little spring in a seller’s step—and a lot more fear in a buyer’s heart.
Prices in many markets have been rising since 2011, but NAR’s latest quarterly report shows that “the number of areas experiencing double-digit price appreciation doubled compared to last quarter.” In the first quarter of 2015, 51 metro areas saw double-digit increases, up from 24 in the fourth quarter of 2014.
Though price increases weren’t recorded everywhere—14% of the areas it measured showed lower median prices—single-family home prices rose in 148 out of the 174 markets it measured.
The reasons? The usual stuff: low interest rates and the pale supply against the bold demand. With the threat of higher interest rates looming, and national median income on a slow uptick, says NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, AR, “more consumers are feeling confident about their financial situation and looking to lock in before rates eventually start to climb.”
That doesn’t mean the price incline will continue. Lawrence Yun, NAR’s chief economist, says it’s possible prices in some of these newly and rapidly more expensive areas could level out, “unless housing supply markedly improves and tempers its unhealthy level of growth.”
The national median price of an existing single-family home rose 7.4% from a year ago, from $ 191,100 to $ 205,200. But total existing-home sales (that’s single-family and condo) declined 1.8 % to a seasonally adjusted annual rate of 4.97 million in the first quarter, from 5.06 million in the fourth quarter of 2014.
On not cashing in
One phrase that leapt out at us in the NAR’s press release was “subpar homebuilding activity.” That’s Yun’s way of describing an odd predicament that homeowners are finding themselves in: Though they’re enjoying their rise in household wealth, says Yun, some “are hesitant to move up and sell because they aren’t confident they’ll find another home to buy.” And that, he says, is “leading to the ongoing inventory shortages and subsequent run-up in prices seen in many markets.”
The five most expensive housing markets in the first quarter were par for the course: San Jose, CA, metro area, with a median price of $ 900,000 for an existing single-family home; San Francisco, $ 748,300; Honolulu, $ 699,300; Anaheim-Santa Ana, CA, $ 685,700; and San Diego, $ 510,300. In 61 metro areas, condo prices rose, too, up 1.5% from the first quarter of 2014 to $ 193,500, from $ 190,600.
The lowest-cost metro areas were largely concentrated in the Midwest or mid-Atlantic states. In the Youngstown-Warren-Boardman, OH, area, the median single-family home price was $ 64,300. In Cumberland, MD, it’s $ 71,600; Rockford, IL, $ 78,600; Decatur, IL, $ 82,200; and Toledo, OH, $ 83,800.
The trends shifted significantly by region, and the West and Northeast are still the most expensive places to live. While existing-home sales in the Northeast dropped 11.2% in the first quarter, they remained 2.2% higher than the first quarter of 2014. In the first quarter, the median existing single-family home price rose 2.4%, to $ 245,000.
In that same quarter, existing-home sales declined 2.0% in the Midwest, yet they’re still 6.3% higher than the year before. The median existing single-family home price there rose 8.9% to $ 156,600.
In the South, existing-home sales fell a wee 0.5%, but that’s still 7.8% above the first quarter of 2014. The median existing single-family home price there was $ 182,300, 8.2% more than the year before.
In the West, existing-home sales rose 1.5%, 5.4% more than a year ago. The median existing single-family home price there increased 5.8% to $ 295,500—the most expensive in the nation.