In June existing home prices shot up nationwide by about 10.7% according to Trulia, a leading online residential real estate firm. This is both good and bad news, depending on which side of the fence you’re standing on. Sellers are probably doing a little happy jig now while some buyers may be feeling a little blue or shocked by the news.
Trulia recently reported that asking prices have been creeping up nationally at a rate of about 1.5% each month. Nearly all of the largest U.S. real estate markets have seen this bump in sale prices. The asking prices have surged by as much as 30% in some regions of the country, such as Charlotte, N.C. The average sale price there is currently about $240,000. And it doesn’t look like we’ve seen the end of this price hike.
“We’ve seen an increase in market prices for 18 months now,” said Doug Gartley, who has been a realtor with Detroit-based In-House Realty for six years. “Across the board, markets are up, many with double digit increases.”
Landlords have also reported a rise in rent prices—up 2.8% —over the last year in the major U.S. markets. All signs are showing that this trend will continue.
“I think the price increase is a trend that will continue through the end of the year,” said Chisholm Gentry, owner of Gentry Real Estate in San Francisco, Calif. “This trend is fueled heavily by the economic recovery. Investors (domestic and foreign) are beginning to surge based on American real estate being ‘on sale.’”
Gartley said many buyers struggle to find what they’re looking for with a reduced inventory of properties on the market and with the rising prices. So it may be a good time to buy for those contemplating homeownership. Jumping into the market now may equate to a significant savings in the end.
“The trend is forcing buyers to be well qualified and pushing them to put down larger down payments,” he said. “You have to keep in mind that rates are still historically low and this is a seller’s market.”
Gentry said that the housing market has historically been a trailing indicator of our economy. But with the recovery, it’s changed into being a leading indicator of our economic recovery and in some senses new strength.
Gartley’s words of advice for buyers: Get prequalified so that you’re ready to act when you see a prime opportunity. Meanwhile, Gentry suggests that new sellers to the market avoid overpricing their homes.
“In fact, in our current market, underpricing is the smartest thing a seller can do,” he said. “Let the market speak; and it will.”
Please share if you have other tips for buyers or sellers in this fast changing housing market.