As 59 million people nationwide consider becoming home buyers this year, real estate prices have soared to record highs and inventory continues to be in shorty supply, making the path to owning a home in America increasingly challenging. Many of those would-be buyers, older millennials and Generation X members ranging in age from 27 to 52, show ‘more willingness’ to buy a first home or trade up to a new home, according to a recent survey by Bankrate.com.
Here in Boulder County, home price appreciation is commonplace, where the last five years saw a 49 percent increase in the average price for a single-family home, according to the Boulder Valley Real Estate Report published February 2017 by RE/MAX of Boulder.
The trend of rising prices extends across the nation. In the final three months of 2014, increased home prices picked up speed with most metro areas soaring to new record home price highs, according to the National Association of REALTORS®. More than half of the 150 home markets tracked by NAR since 2005 show a median sales price at or above an all-time high.Median single-family home prices rose in 89 percent of U.S. markets measured by NAR, with thirty-one metro areas experiencing double-digit gains. The five highest-priced housing markets listed here in the fourth quarter of 2016 do not include any Colorado metros, with California claiming four of the five.
On the inventory side, levels are persistently low nationwide at 6.3 percent below levels one year ago. Inventory is at the lowest level since 1999 when NAR began tracking supply of housing types.
“Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets,” says Lawrence Yun, NAR’s chief economist. “The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions.”Yun notes the buyer interest is high in most areas due to mortgage rate under 4 percent for most of the year and near full employment due to the creation of 1.7 million new jobs. “At the same time, the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market,” says Yun.
In the fourth quarter, the national median existing single-family home price was $235,000 – up 5.7 percent from the fourth quarter of 2015. NAR reports that to buy a single-family home at the national median price, a buyer making a 10 percent down payment would need an income of $48,332; and they would need an income of $42,962 for a 20 percent down payment.