Home prices in 10% of the nation’s top 200 housing markets have recently hit new peaks or are only a hair away, new data show. Another two dozen of the top markets are within 5% of their peaks. many of the remaining cities are likely to hit new peaks this year. The data show how far prices in many cities have rebounded since the historic housing collapse after mid 2006.
Many cities now or at previous highs never saw the price runup leading up to the bust that others did. They didn’t drop as far, so they have less of a climb back. Of the cities within 5% of their previous peaks, none saw more than an 11% decline in home values from mid 2006 to the market’s bottom in 2012.
Much of the recovery can be attributed to a number of factors, none more than the lack of inventory. Rising mortgage rates and job growth are the other components that have been part of the recovery. There are still dozens of markets where prices peaked in 2006 that are still 25% to 60% below those highs.
One constraint is that sellers are afraid they won’t be able to locate a replacement home, since so few properties are for sale. The lack of inventory has effected that segment of buyers most of all. Multiple offers are the new normal in this market. We basically went from having lots of inventory and no buyers to having a lot of buyers and no inventory. This combination has led to rising prices and a concomitant drop in short sales as homeowners regain positive equity. With prices starting to go up, the renewed hope is that some of the underwater homes will become afloat.
A number of prospective buyers have made offers on homes and lost out to higher bids. Homes are so scarce that some offers are substantially higher than asking prices and many buyers are releasing appraisal, inspection and loan contingencies to make their offers more competitive. This maneuver would not have been even considered as late as 2012 and is now a common practice among many buyers.
Investors, all cash buyers and first time and repeat buyers are all competing for the same properties. This has created a demand that far outweighs the supply. This buying frenzy combined with limited inventory will continue throughout the rest of this year and make buying a home feel like a lottery win. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and easy access to view local area homes for sale in Davis, California and the surrounding communities.