FREDERICKSBURG, VA – Experts say higher property prices will persist for at least the next few years.
The coronavirus pandemic has helped drive house prices soar, but it’s not the only factor responsible for the market shift. The number of homes available for sale is at an all time low, which means that supply is scarce. In the meantime, demand has increased due to historically low mortgage rates and a large contingent of millennials looking to buy their first homes.
Property prices in the Washington-Arlington-Alexandria DC-VA-MD-WV metropolitan division, which also includes Fredericksburg, rose 10.6 percent in January 2021 compared to January 2020, according to the CoreLogic Case-Shiller Index Price movements over time.
Metropolitan Statistical Areas, Metropolitan Statistical Areas, and Divisions are a product of the US Census Bureau and are used to designate areas with strong economic ties. Depending on the population density, they contain one or more rural districts.
Prices in the bottom third (less than $ 423,000) of the Washington-Arlington-Alexandria DC-VA-MD-WV metropolitan division market – often referred to as starter homes – rose 12 percent year over year. The top third of the market (homes over $ 627,000) saw a 10 percent increase.
The Flagstaff, Arizona metropolitan area saw the largest year-over-year increase of 24.1 percent in January, followed by Boise, Idaho at 22.2 percent and Bend-Redmond, Oregon at 22.1 percent.
According to the Case-Shiller Index, less than 1 percent of metropolitan areas recorded a price decline compared to the previous year.
Spring 2021 is approaching the most competitive home buying season in decades. A current analysis of Realtor.com’s offers The National Association of Realtors found that 64 percent of the subway areas saw double-digit year-over-year increases in median list price. Only 1 percent of metro areas had more active listings on Realtor.com in March 2021 than in March 2020.
A number of factors led to historic increases in house prices, said Gay Cororaton, director of housing and commercial research for the National Association of Realtors.
The main factor was the historical lack of supply in the real estate market, Cororaton said. The inventory is at its lowest level since 1982.
It could take time for the housing market to return to a sense of normalcy, she said. The current inventory is about two months of housing supply; With an offer of six months, supply and demand are more closely coordinated.
“I think it will take time to do that,” Cororaton said. “At least in the next two years, I would expect us to deliver two to four months.”
One reason for the housing shortage is a slowdown in new housing construction. 1.4 million new homes were built in February 2021, up from 1.6 million in February 2020, Cororaton said. The high cost of wood is a factor in this decline.
The pandemic has also saved homeowners from letting potential buyers into their homes for demonstrations or open days, Cororaton said.
Historically low mortgage rates have boosted the demand side of the equation, Cororaton said. Interest rates are not expected to rise above 4 percent in the next two years, which means borrowing will remain affordable.
The National Association of Realtors’ monthly survey of its members found that four buyers are competing for every home sold, compared with three buyers at the same time last year.
Demographic change is another factor, Cororaton said, as more and more millennials become interested in owning homes.
Editor’s Note: This post was automatically generated from an analysis of CoreLogic Inc.’s Case-Shiller index data by The Associated Press. Please report bugs or other feedback [email protected].