Nationwide, home values have been rising at least somewhat sharply for some time now, and it's a trend that seems unlikely to abate any time soon. This may have a particular impact on first-time buyers because lower-cost homes are frequently less broadly available than other properties, and rising prices could more quickly push them out of being able to afford a home.
Between September 2016 and the same month in 2017, home prices across the country grew 7 percent, as well as nearly a full percentage point from August 2017 alone, according to the latest market data from CoreLogic. Moreover, those values are projected to grow another 4.7 percent by September 2018, highlighting just how quickly home prices continue to appreciate. This trend is, perhaps not surprisingly, attributable mostly to the tight inventory seen nationwide.
Indeed, of the 50 largest markets nationwide, average home costs in 24 were seen as overvalued, and only 8 were undervalued, the report said. That disparity is only likely to broaden as prices continue to rise in the year ahead.
Inventory issues linger
First-timers currently make up a much smaller chunk of the buyers' market than has been seen since the recession came to an end (34 percent now versus an average of 39 percent) and it's believed that shortfall comes specifically because low-priced homes are so hard to come by, according to the National Association of Realtors. Jessica Lautz, managing director of survey research and communications at the NAR, noted that home prices have risen on an annual basis in each of the last 67 months – more than five and a half years – and in a lot of cases, homes for sale garner at least a few bids.
While builders in particular are starting to turn their efforts to constructing smaller, more affordable homes, they haven't really been able to come close to meeting the extreme demand seen in the market today, the report said. That's also a trend that is likely to continue for some time.
Owners aren't likely to help
The other side of coin regarding limited supply is current owners aren't really looking to sell, despite the hefty increases in home prices over the past few years, according to The Wall Street Journal. That's due in part to many just now starting to gain more equity in their homes after the market crash put them underwater, but also because many moved to refinance when rates were at their lowest levels, and would lose out on those deals if they were to sell and enter the market themselves.
Rates and prices alike are expected to continue to rising over the next several months and beyond, and that could pose problems for first-time buyers. As a consequence, the more that can be done to get into the market soon, rather than waiting even until spring, the more likely buyers will be to keep their costs relatively low.
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