How Sky High Home Values Can Impact Today's Buyers

In 26 percent of the country, homes are breaking records due to the recovery, and the start of this year’s competitive housing market. It’s really no surprise San Francisco and San Jose are shattering their home price records, but homes in the Midwest, Northeast, and South are creeping above their usual median home values.

Most markets in the south (particularly Texas and Tennessee) are seeing new heights for their homes. Here is what is going on.

Low inventory increases price

This time last year there were many more homes for sale across the country. Now there are fewer homes giving buyers less options. Even if they have the finances to buy a home, finding the right one for them can be incredibly difficult.

Because the inventory is down, the competition for homes can be quite severe, creating bidding wars and pricing out beginning buyers. For those of us who are looking to get in the real estate market for the first time, we are having trouble gathering money for a down payment when home prices are rising and rent is as well.

Is this another housing bubble?

Because homes are breaking new records some experts are beginning to worry. Places with the hotter markets like several cities in California have been loving the double digit pace for months now, but it isn’t exactly normal. These places usually have plentiful of new tech jobs while their housing availability is staying the same.  Home competition is increasing in these areas and the low inventory is making it really difficult for renters to break into the market.

Returning to normal

The good part about home prices rising is that fewer homes are underwater, and they are free to sell, increasing inventory. More homes being sold on the market means buyers have more options. The other side of that says homes are closer to being in a “normal” market, where home values reach new records every month.

The new records indicate we are long gone from the days of recovering. Rather, we are setting new grounds for the future concluded by economic growth throughout the economy. Most of the country has seen a return to normalcy in the housing market, and other markets are on their way. We can only hope the records continue to be set every month, but we have to be cautious to the inflation of other markets as they are still double digits behind. 

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