Even as sellers in high-end markets like Manhattan, London and Greenwich, Conn. are being forced to pull their inventory from the market because of a paucity of offers (this despite the “wealth effect” that one might’ve expected to arise from rallies in stocks and bitcoin), home prices in two-thirds of US cities climbed to record highs during the fourth quarter as developers’ preoccupation with luxury housing has left buyers in mid-priced markets battling it out for a record-low supply of listings…
Prices for single-family homes climbed 5.3% from a year earlier nationally, reaching a peak in 64% of metropolitan areas, according to the National Association of Realtors. Of the 177 regions in the group’s survey, 15% had double-digit price growth, up from 11% in the third quarter.
Meanwhile, Bloomberg claims the steadily improving job market has helped drive prices higher (we imagine the flood of money-creation by central banks also had something to do with it).
Home values have grown steadily as the improving job market drives demand for a scarcity of properties on the market. While prices jumped 48 percent since 2011, incomes have climbed only 15 percent, putting purchases out of reach for many would-be buyers.
The consistent price gains “have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation,” Lawrence Yun, the Realtors group’s chief economist, said in a statement. “However, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”
Sales of previously owned homes, including single-family houses and condos, increased 4.3% to a seasonally adjusted rate of 5.62 million in the fourth quarter, the Realtors said. At the end of December, only 1.48 million existing homes were available for sale, 10.3% less than a year earlier.
Predictably, the most expensive markets were in densely populated coastal areas where job growth and wealth creation since the financial crisis have largely clustered…
The most expensive markets were San Jose, California, where the median price was $1.27 million, followed by San Francisco, the Irvine, California, area, Honolulu and San Diego.
The San Jose area had a 26 percent increase in prices, the biggest of any region, followed by Reno, Nevada, and the Putnam/Dutchess County area, north of New York City. The biggest decline was in Glens Falls, New York, where prices dropped almost 12 percent. Cumberland, Maryland, and Elmira, New York, followed.
In a demonstration of the extent to which the correlation between the most expensive urban markets and the rest of the country (a trend that will no doubt be exacerbated by the Trump tax plan, which caps SALT deductions) landlords in Manhattan, one of the country’s most expensive rental markets, were forced to slash rents to their lowest levels in 2014 as a massive flood of new supply swamped the market.