There may not have been any time since World War II when home prices have risen as fast as in the last two years. According to the carefully followed S&P CoreLogic Case-Shiller Indices, in January, home prices rose 19.2% nationwide compared to the same month last year.
Among the reasons for the January rise in home prices were people racing to get low mortgage rates as interest rates have begun to rise. Another factor was a sharp drop in the number of homes available for sale. And the city that has run out of homes for sale is Denver.
The surge in home prices in the past two years has been triggered by several factors. Among them is that many people have relocated from expensive coastal cities where home prices can be double the national average or more to cheaper inland cities that offer lower cost of living overall and what some may consider a better quality of life. In addition, many people who have been able to work from home because of the pandemic became more mobile.
Up until recently, another major driver was historically low mortgage rates. They dropped below 3% for a 30 year fixed rate loan and stayed at that level for months. In the new interest rate environment, the rate has moved toward 5%, cutting home buyer purchasing power. (For historical perspective, this is the mortgage rate in America every year since 1972.)
Experts often look at two factors to measure changes in the real estate market by metro. One is how fast home prices are rising and the other is the number of homes in inventory, which is essentially the number of homes for sale at any point in time.
Realtor.com has just released its March Housing Report. Among the findings is that the median price of a home for sale in the U.S. rose above $400,000 for the first time in history, hitting $405,000. Buyers could get some relief in future months. Danielle Hale, chief economist for Realtor.com suggested that inventory declines may slow, perhaps opening up supply and moderating prices.
For now, however, prices of listed homes rose 13.5% compared to last year to a median price of $405,000. And the median days a home was on the market remained very low. In several of the 50 largest metros, the number was below 25 days. To determine the markets where homes sell the fastest, 24/7 Wall St. reviewed Realtor.com’s report.
The metro where homes were on the market for the fewest days in March was Denver, at an extraordinarily low nine days. This was down by seven days compared to the same month last year. Not surprisingly, prices in the city also surged. They rose 18.8% year over year to $663,000, which makes Denver among the most expensive markets in America. (Find out if Denver is among America’s 50 best cities to live.)
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