Homebuyers still face challenging market
The latest S&P CoreLogic, Case-Shiller Indices for June just came out, and the industry is not happy.
Home prices increased annually, however some in the industry are concerned over the lack of monthly growth. Others point out the problems these rising home prices are bringing to homebuyers.
“June represents the fifth straight month of flat or decreasing year-over-year price gains, but homebuyers are still being challenged as prices outpace income growth yet again,” Trulia Chief Economist Ralph McLaughlin said.
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“The data from the first half of 2016 is in, and thus far, the relentless sellers’ market we’re in the midst of shows few signs of reversing,”Zillow Chief Economist Svenja Gudell said. “The overall inventory of homes for sale is way down, national home values continue to rise and those homes that are available to buy are selling seemingly as soon as they hit the market.”
One point that economists pointed out, however, was the cool down in the San Francisco Bay Area.
“But while the overall U.S. sellers’ market looks pretty well-entrenched, in some markets, conditions are slowly starting to change,” Gudell said. “In the once red-hot Bay Area, for example, annual home value appreciation has slowed from double-digit growth just a few months ago to levels closer to the national average.”
“And in a handful of areas, including pricier markets like San Diego, inventory is starting to creep back up,” she said. “As conditions in more local markets begin to shift and become more balanced between buyers and sellers, the national market will follow suit.”
McLaughlin also pointed out the slowing growth in the West.
“Home price growth in San Francisco drops for the fifth straight month, signaling the smallest gains since August 2012,” he said. “Still, prices are up 6.4% and have a long way to go before incomes catch up.”
That being said, one expert points out that there is one group that benefits from these rising prices.
“The strong home price growth in much of the country, and meteoric rise in the West, is led by a continued lack of homes available for sale,” Quicken Loans Vice President Bill Banfield said.
“While homeowners welcome rising prices, it could begin to hinder new buyers if affordability comes into question, especially with home prices rising twice the speed of inflation in much of the country,” Banfield said.
Capital Economics Property Economist Matthew Pointon said that he only expects home prices to accelerate from here.
“At the national level, house prices rose only modestly in June according to Case-Shiller,” he said. “But, with market conditions tightening, we suspect gains will accelerate from here and for now see no reason to change our forecast for a 6% rise in prices this year.”