It’s no secret that homes have been appreciating in value the past few years. Some areas in some states have not fully recovered from the 2007 market crash but they’re getting close. Homes in some cities have appreciated beyond their prices pre 2007 crash. Regardless of the recovery even with the lower interest rates, prices are keeping some folks out of the market.
According to CNBC “Home prices nationwide jumped 6.9 percent in April from a year ago, according to the latest monthly value report from CoreLogic. While that is slightly less than the 7 percent annual jump in March, it is still making more and more markets unaffordable. Of the nation’s 50 largest housing markets, 52 percent were considered overvalued in April.”
The lack of homes available on the market is not helping the prices either. When there’s a shortage of homes on the market which has been the recent trend, it becomes a hot seller’s market so the prices continue to climb. Until we see more homes on the market, housing prices will probably continue to rise.
More than half of homes currently listed for sale in Miami (62.4%), Los Angeles (57.2%), San Diego (55.3%), San Francisco (55.2%), Denver (52.8%), San Jose (50.9%) and Portland, Ore. (50.3%) are unaffordable by historical standards.
Nationally, Zillow found that one-third of homes are currently unaffordable, and in many metro areas, the majority of homes remain more affordable now than they have been historically for buyers making the area’s median income.
But as mortgage interest rates rise along with home values, affordability will worsen, and buyers will need to spend ever-larger shares of their incomes to buy increasingly expensive homes.
Home buyers making the median income in Los Angeles, San Francisco, and San Jose should already expect to pay a larger share of their income today toward a mortgage than during the pre-bubble years.
Some discouraged home buyers are looking into other options to offset the high cost of owning a home. If done right, building a home yourself can help save you some money and if you choose the right type of home building such as prefab homes, you may even end up with some upside equity.
Here’s a site with a great explanation of what prefabricated homes are and how they stack up against traditional stick built homes. www.LHLC.com
Click to see an explanation of prefabricated houses, manufactured homes, modular homes, kit homes & traditional stick built homes.