US Home Prices

Wondering about where home prices are headed? Is now the time to buy, and is selling now wise too? How high could US housing prices reach?

Below we see the price forces and stats from real estate data sources such as NAR, NAHB, FRED, Redfin, Corelogic, Statista, Trading Economics and Reuters. The true picture of housing prices is to the upside, and read on to find out why homes will cost more in 2022 and the next 5 years.

Housing market forecasters are reluctant to offer solid predictions of home prices for the next 5 years or even 6 months. It’s frustrating for home sellers who need to time the sale of their house and make new living arrangements. You can’t sell your home if you have no where to go.

 

Let’s do a deep dive into the topic of real estate and what’s actually encouraging the ultra-high and rising home price growth.  I would be delighted and honored if you shared this epic report via your social accounts. No one else is thoroughly exploring home price directions and sales stats providers are notoriously slow and reluctant to disseminate data to buyers and sellers. Your readers will enjoy it.

Housing prices across the US tripled in growth compared to last year. According to Redfin, home prices are up 24.8% year over year.  Case Shiller forecasts home prices will rise 23.8% year over year for 2022. See more on housing market predictions for 2022 and the next 5 years. Whichever housing price stats you choose to believe (NAR, local, Zillow or Redfin), the price growth rate may be slowing:

No one has come up with a believable home price forecast for 2022 because there are quite a few demand factors that are question marks. These 2022 variables you should watch are interest rate rises, taxes, regulations, inflation, infrastructure spending, political standoffs, 2022 Senate elections, China political and trade actions, stock market volatility, and commodity prices.

If we do enter a period of stagflation as economists are talking about, it means GDP will stagnate and inflation will eat away at incomes, investments, savings, reducing money available for buying homes. More stock market and finance experts believe inflation will become a problem. Currently, it’s at 5.39% which is very high.

Some Housing Experts are Talking Flat Prices

Housing experts and economists are detached from reality.  People want houses and their determination and persistence have been evident for two years now just as big stimulus is ready to be injected into a reawakening economy.

Yes, they’re saying demand will weaken since buyers have purchased and are onto the next thing in their life such as travel, new cars, swimming pools, etc.  However, we know bidding wars have happened from New York to Los Angeles to Dallas to all areas of Florida.  Bidding wars and record home showings means big demand.  These buyers haven’t found their home and they’re not going away.

Consider that although many buyers are renting, they don’t want to be. Renting is one step away from homelessness which we know is a big problem.  Add 200,000 migrants coming in across the US border every month plus foreign buyers and students returning to the US, and why would demand for homes be written off?  Mortgages are very low so it’s a good time to buy if you can find something affordable.

Buyers and sellers like yourself are fatigued and burned out right now, but as fall returns and the pandemic keeps easing, vaccinations grow, buyers will be out in force.  A price lull will only encourage more of them to return to their home search. This graph from ShowingTime shows buyers are on the hunt again (up 14.4% in the West!)

Those homeowners looking to sell their house fast will comforted with the knowledge they are selling at record highs and next year may be much higher depending on the type of property you have. And for those looking to buy and house or condo, the immediate situation is a little better with more inventory available.  Housing construction starts are up of late.

The question of housing prices really comes back to American’s desire to buy or sell. If you’re considering selling, see the key posts on selling for over list price, and if you’re buying, you’ll need to expand your efforts with a thorough search for homes for sale.

New Home Construction and the Cost of Building

NAHB reports that median new house prices rose 6.1% to $361,800 from 12 months ago. New homes sales dropped 6.6% the lowest in 14 months. Construction was hampered by labor, rising prices, material costs. 

“Home builders continue to hold back on contracts for new homes given input cost and availability uncertainties, with significant uncertainty about what it will cost to build a house and when it can be delivered.. Until builder costs and supply-chain problems become less of an impediment, it is hard to see new sales picking up significantly in the near term.” said David Berson, chief economist at Nationwide in Columbus, Ohio.

NAHB reports that housing regulations, labor and materials shortages have pushed the average new home construction cost to $297,000 per house. That includes an estimated $93,870 costs from housing regulations.

Of course, NAHB’s outcry is for a regulation of regulations to bring costs under control. Very smart but sure to draw political resistance. A lot of local and state governments have their hands in the till to extract funds. The role of NIMBYism is paramount.

Resale Home Prices Rocketing

For the immediate future, next 3 years, there is no solution for high home prices and supply.  New construction cannot keep up, and the population will grow faster.  New home construction was down 6.6% in June.  Demand will rise continuously against supply chain and materials shortage issues.  Infrastructure spending is definitely needed and it will push home prices much higher. Massive liquidity in the economy and markets will increase inflation on all products while Millennials are determined to buy their first family home.

While governments try to kill demand, more Americans oppose government mandates and will not give up on their personal dreams. It seems this generation of young buyers are more creative and determined to win in this war with government and capture their dream against all odds.

The question for home buyers and mortgage holders who have to refinance in 5 years, is whether to buy now or wait for some kind of price drop.

The threat to home prices for sellers (and some may want to sell soon) is a potential economic setback.  That threat is unlikely but still very real. Before you shell out $350,000 to a million dollars for a home, consider what your mortgage might jump to in 5 years. Vicious front end loading of interest repayment on mortgages by lenders leaves you with big personal losses and still a potential bankruptcy situation in 5 years, should the economy tank after its bull run.

That’s not to say you shouldn’t buy a house, but rather setting a price limit and not going above that.  In a setback, higher end homes lose their value fastest.  Consider as well that Federal and state taxes will rise.

The Big Interest Rate Threat

The Fed may be forced to raise interest rates (debt, inflation, cool consumer market demand and reduce commodity prices, e.g., gasoline, EV car battery components, steel). Their failure is that refuse to see the real demand that drives Americans. As the pandemic eases, confidence and hope for the future will rise.

The US is poised to improve, however, dependence on China and the embarrassment of the increasing trade deficit with China has an expiration date. Credit has to be paid back and China would love a crashing America, where it could buy up property and businesses for pennies on the dollar. Big picture: big risks due to China.

Personal income increased $26.1 billion (0.1 percent) in June and personal consumption expenditures (PCE) increased $155.4 billion (1.0 percent) according to estimates released today by the Bureau of Economic Analysis.

Most Americans who have bought homes possess huge savings so the risk of foreclosure is low. Americans spent more in June, but personal income and savings are high overall, despite lingering unemployment. That’s due to the stimulus spending of course, which will continue. With such massive stimulus injections into the economy, a downturn is inconceivable, which is why the fears of a housing crash are subdued this summer.

Those big savings rates have encouraged the buying of expensive homes and stimulated the luxury construction market.  Most of the sales in California and Los Angeles are high end priced homes.  The upcoming eviction crisis will load a number of homes on the market, but they will be swallowed up by single and investor buyers.  The rental housing market will not cool.  Rent prices will rise more and this prevents or discourages some sellers from selling.

There is little to support the forecast of lower home prices anytime soon.  Current moderation in some regions is only due to the lag in reopening. Pandemic destination cities are seeing slower growth in housing prices.

Home buyers are perplexed about whether to buy a home and sellers too about when to sell theirs.  Is this a housing bubble. Are the prices in Dallas, San Diego, Denver, New York, Atlanta, Chicago, Bay Area, Boston, and Los Angeles legitimate?

Read more about home prices in June in the real estate housing market report.  July stats won’t be released until July 21.

Suburban Home Prices Growing Fastest

Even with the pandemic exodus, buyers are drawn more to the suburbs, than urban or rural areas. Is this a supply issue, or is it expected they will be called back to the office after the pandemic has ended?

See more details on Florida home prices, California home prices, New York home prices, Boston home prices and Chicago home prices. Check recent home price growth in Seattle, San Antonio, Salt Lake City, Atlanta, Tampa, San Diego, San Francisco, Philadelphia, Denver, Houston, Austin and Colorado Springs.

Kiplinger conducted some home price growth research and founds some astonishing stats, particularly with respect to California real estate. Plenty of small to mid-sized towns have grown fast. Upstate NY is another hot spot for buyers.  Lower housing costs, lower taxes, and work from home freedom is likely driving a good portion of the demand.

Home Price Growth in the Major US Metros

Metro Area (data from Kiplinger.com)	Median Home Price	% Change 1 Year	% Change Since Peak*	% Change Since Bottom†	Affordability Index
Oxnard, Calif.	650,000	17.6	8.9	80.1	10
New Haven, Conn.	235,150	17.1	-13.9	52.6	7
Rochester, N.Y.	153,000	16.9	44.4	60.3	3
Buffalo, N.Y.	160,000	16.5	85.2	77.1	4
San Jose, Calif.	1,160,000	16.2	58.2	117.5	10
Hartford, Conn.	237,500	15.2	-0.7	33.1	4
Modesto, Calif.	345,000	14.7	-2.2	147.8	9
Ogden, Utah	289,500	14.5	92.7	120.1	10
Greensboro, N.C.	160,000	14.2	26.5	53.1	3
Columbus, Ohio	219,000	13.8	38.7	93.9	4
Lansing-East. Lansing, Mich.	138,000	13.7	1.7	87.1	1
Bridgeport, Conn.	460,000	13.5	-9.7	38.9	8
Riverside-San Bernardino, Calif.	393,000	13.4	-3.1	111.1	10
Stockton, Calif.	400,000	13.2	-0.8	147.7	10
Seattle, Wash.	525,000	12.8	47.5	117.2	9
Cleveland, Ohio	146,000	12.7	2.5	78.4	1
Fresno, Calif.	299,000	12.7	-5.8	91.8	9
Harrisburg, Pa.	175,000	12.7	16	37.9	2
Memphis, Tenn.	156,400	12.7	11.9	80.8	2
Bakersfield, Calif.	245,000	12.4	-11.6	89.8	7
Milwaukee, Wis.	228,417	12.4	0.5	68.9	2
Worcester, Mass.	260,000	12.3	18.1	90.6	6
Detroit, Mich.	181,815	12.1	7	136.9	4
Winston-Salem, N.C.	165,000	12.1	22.7	55.6	3
Phoenix, Ariz.	308,900	11.9	4.1	98.6	7
Albany, N.Y.	215,000	11.7	17.5	41.4	4
Grand Rapids, Mich.	210,000	11.7	50	116.1	5
Albuquerque, N.M.	180,000	11.6	11.5	55.3	6
San Diego, Calif.	620,000	11.5	22.3	91.2	10
Tucson, Ariz.	229,000	11.5	-1	74.6	6
Indianapolis, Ind.	185,000	11.4	28.2	91.3	1
Colorado Springs, Colo.	345,000	11.2	57.7	85.6	8
Philadelphia, Pa.	240,000	11	6.9	48.4	1
Springfield, Mass.	217,500	10.8	18.1	67.9	6
Knoxville, Tenn.	196,000	10.7	35.4	68.2	3
Richmond, Va.	257,000	10.7	16	59.6	7
Chattanooga, Tenn.	189,000	10.3	46.4	71.7	4
Lakeland, Fla.	200,000	10.2	-6.1	100.6	6
Nashville, Tenn.	298,000	10.2	69.3	94.4	5
Cincinnati, Ohio	179,000	10.1	28	72.3	1
New Orleans, La.	210,000	10.1	40.1	68.2	3
Palm Bay, Fla.	210,000	10	1.5	112.9	5
Austin, Texas	340,000	9.9	95.2	97	9
Charlotte, N.C.	255,000	9.7	-12.4	77.3	4
Chicago, Ill.	252,000	9.7	-12.4	77.3	5
New York, N.Y.-N.J.	450,000	9.7	3.1	51.1	10
Virginia Beach, Va.	250,000	9.7	-5.3	34.9	9
Atlanta, Ga.	250,000	9.5	21.3	115	4
San Francisco, Calif.	930,000	9.5	31.7	110.3	10
Miami, Fla.	302,000	9.3	-12.9	101.6	8

 

Buyers from California to Texas to Florida and New York are asking about a possible housing price crash, but the economy doesn’t look like it will suffer a setback anytime soon. Once the wishful thinking subsides and house construction picks up, we’ll see more confidence that house prices will continue high but more homebuyers will be successful in finding a home and more sellers will be willing to let go of their home and get on with their lives.

Home sales contracts timeline history chart. Screenshot courtesy of NAR.Home Sales by Price

Realtor.com housing Market Forecast 2021

Last year, price growth before the pandemic stood around 8%. Logic tells us with a recovery plus trillions in stimulus money along with low construction levels, huge demand and low mortgage rates, that home price growth could exceed 20%.

Whether it’s resale homes or new homes, the economy is reawakening with fits and starts due to the pandemic.  We haven’t seen a synchronicity in this yet.  Both resale and new home inventory is low, especially product in the starter home price category. Sales of luxury priced homes however are booming.

Case Shiller Price Forecasts

Last June, Corelogic predicted a home price drop in 2021.  That has not transpired and likely won’t anytime soon.

Housing Price Hotness Index

NAR offers its rating of the hottest housing markets:

City	Nielsen hotness Index	hotness_rank	hotness_rank this month	supply score	demand score	median listing price
kingston, ny	234	47	190	100	49.8	$339,900
iowa city, ia	240	77	158	100	34.8	$281,900
peoria, il	130	57	157	100	49.5	$138,800
utica-rome, ny	162	44	149	100	57.9	$169,500
iowa city, ia	240	127	135	98	14.0	$276,000
lebanon, pa	299	17	131	79	94.0	$236,000
bloomington, in	244	46	129	79	70.6	$315,000
lincoln, ne	155	52	124	100	49.8	$313,480
rapid city, sd	265	54	123	70	72.6	$305,712
buffalo-cheektowaga-niagara falls, ny	47	50	120	71	74.6	$240,000
allentown-bethlehem-easton, pa-nj	66	11	120	91	86.3	$269,450
columbia, mo	237	112	118	89	29.1	$247,100
springfield, il	198	69	116	100	40.1	$153,900
springfield, mo	110	91	115	74	51.2	$230,000
binghamton, ny	180	79	114	65	67.6	$162,450
jacksonville, nc	239	101	111	63	60.2	$218,229
reading, pa	128	12	110	82	94.0	$249,950
columbia, mo	237	69	110	75	59.5	$249,900
detroit-warren-dearborn, mi	12	71	106	94	41.8	$274,900
columbia, mo	237	35	105	89	69.6	$269,900
hagerstown-martinsburg, md-wv	183	36	105	92	63.5	$271,900
iowa city, ia	240	179	105	82	5.0	$289,900
lancaster, pa	103	15	103	84	91.0	$319,450
decatur, al	266	44	102	72	73.2	$219,900
allentown-bethlehem-easton, pa-nj	66	52	102	64	82.9	$242,900
pottsville, pa	278	43	101	62	95.3	$108,500
hagerstown-martinsburg, md-wv	183	97	101	70	52.8	$245,000
myrtle beach-conway-north myrtle beach, sc-nc	111	188	97	17	66.6	$255,000
johnstown, pa	290	144	96	5	98.7	$74,900
charleston, wv	190	159	95	14	84.9	$148,750
ann arbor, mi	142	101	92	61	62.9	$456,990
chambersburg-waynesboro, pa	271	63	90	56	84.3	$241,200
state college, pa	270	39	90	72	86.0	$337,314
gainesville, ga	246	58	88	75	66.9	$364,900
lebanon, pa	299	38	88	69	94.6	$239,950
flint, mi	121	40	87	73	85.3	$208,900
sebastian-vero beach, fl	254	130	86	57	53.2	$346,850
warner robins, ga	229	82	86	91	40.5	$236,773
yuma, az	245	51	85	73	78.9	$255,000
redding, ca	227	131	85	70	39.8	$345,000
cedar rapids, ia	169	108	85	80	43.1	$229,621
harrisburg-carlisle, pa	91	30	85	66	93.6	$221,043
fort collins, co	147	68	84	79	60.5	$529,500
rocky mount, nc	274	75	84	46	85.3	$186,950
redding, ca	227	105	84	68	50.5	$402,000
la crosse-onalaska, wi-mn	293	41	83	68	86.3	$261,650
tupelo, ms	300	184	81	53	31.4	$278,500
st. cloud, mn	223	121	81	65	49.2	$287,200
st. cloud, mn	223	82	81	61	71.2	$269,900
muskegon, mi	243	12	81	87	90.3	$219,900
york-hanover, pa	117	13	79	86	89.3	$255,650
yuma, az	245	152	79	46	56.2	$232,757
bloomington, il	224	131	79	63	48.2	$152,229
boulder, co	152	112	78	47	71.6	$937,500
atlanta-sandy springs-roswell, ga	9	123	78	63	47.5	$352,088

In the burbs and outlying towns, particularly in the midwest, we could see bidding wars.

As you can see, home prices in the major metros were doing well.  These are price growth numbers from the last 12 months including the last very difficult three months.

The Migration out of Cities

People are becoming more mobile as high home costs push them out of congested, high priced urban areas to more affordable regions. The new work at home mandate means workers don’t have to be chained to their employer’s physical office location.  And employers too may abandon urban sites for new locations in America’s heartland. They’re looking for the best cities to buy real estate.

Case Shiller Home Price History Chart

The housing experts need to take another look at this chart (see also the housing crash timeline chart). Even through the worst mini-recession ever, home prices keep rising. This upward direction is steepening as it did in 2005/2006.

Is this the best time to buy a home? Will buyers get a break later on in 2020 if they wait? Is this a buyers market? It just may be the right time as the forecast is a return of price growth after the current slowdown.

Can you assess a real estate market without looking at:

1. economic predictions,
2. consumer confidence
3. wages and employment
4. GDP and trade deficits
5. work at home trends
6. fears of disease in high density regions, going forward
7. stock market predictions?

Check the health and predictions for major cities: Los Angeles, New York, Seattle, Chicago, Philadelphia, San Diego, Miami, Boston, Bay Area, Sacramento, and Atlanta. See forecasts for California housing and Florida housing markets.

Reuters polled a number of housing market analysts at the end of a weak month in home sales, and this is still what they believe going forward to 2021:

A look back at how right they were about home price rises. With the cessation of the Corona Virus, the demand for homes will resume.

The most recent Reuters poll reflects a belief in rising home prices yet are less enthusiastic about price rises. And they’re divided.  19 of 34 analysts said U.S. housing market activity this year was likely to accelerate while the other 15 analysts believe it would slow.

The Jan. 12-Feb. 1 poll of nearly 40 housing analysts forecast the U.S. Case-Shiller house price index to rise 5.7% this year and 4.6% in 2022, the highest since polling began for both periods

And from a reuters news report on the economy, Joel Naroff, chief economist at Naroff Economic Advisers is quoted as saying, “Everything seems to be moving in the right direction in the economy … The weak links are recovering and the strengths are staying strong. The Fed is not going to continue doing nothing.”  That would mean he expects the Fed to raise interest rates, and that would push the US dollar to further highs.

Best Cities to Invest?

Cross reference this compiled list of cities with a previous post on best cities to buy property.

For rental income, Silicon Valley, Los Angeles, Dallas, San Diego, and Boston might be best picks. It might be a case of the usual suspects, but start here, work your way to the best zip codes and neighborhoods, types of house, employment growth, and migration patterns of Millennials, and you may have yourself a winner (real estate investment). Who knows which cities will rule after 4 years of the Trump overhaul of the US government and US economy?

Top Home Price Growth Trends

Price growth varies each quarter. These are the latest prices from Kiplinger. California cities come in as the least affordable in the nation. New York, Washington DC, Honolulu, and Seattle are right up there.

Metro Area	Median Home Price	% Change 1 Year	% Change Since Peak*	% Change Since Bottom†	Affordability Index
Oxnard, Calif.	650,000	17.6	8.9	80.1	10
New Haven, Conn.	235,150	17.1	-13.9	52.6	7
Rochester, N.Y.	153,000	16.9	44.4	60.3	3
Buffalo, N.Y.	160,000	16.5	85.2	77.1	4
San Jose, Calif.	1,160,000	16.2	58.2	117.5	10
Hartford, Conn.	237,500	15.2	-0.7	33.1	4
Modesto, Calif.	345,000	14.7	-2.2	147.8	9
Ogden, Utah	289,500	14.5	92.7	120.1	10
Greensboro, N.C.	160,000	14.2	26.5	53.1	3
Columbus, Ohio	219,000	13.8	38.7	93.9	4
Lansing-East. Lansing, Mich.	138,000	13.7	1.7	87.1	1
Bridgeport, Conn.	460,000	13.5	-9.7	38.9	8
Riverside-San Bernardino, Calif.	393,000	13.4	-3.1	111.1	10
Stockton, Calif.	400,000	13.2	-0.8	147.7	10
Seattle, Wash.	525,000	12.8	47.5	117.2	9
Cleveland, Ohio	146,000	12.7	2.5	78.4	1
Fresno, Calif.	299,000	12.7	-5.8	91.8	9
Harrisburg, Pa.	175,000	12.7	16	37.9	2
Memphis, Tenn.	156,400	12.7	11.9	80.8	2
Bakersfield, Calif.	245,000	12.4	-11.6	89.8	7
Milwaukee, Wis.	228,417	12.4	0.5	68.9	2
Worcester, Mass.	260,000	12.3	18.1	90.6	6
Detroit, Mich.	181,815	12.1	7	136.9	4
Winston-Salem, N.C.	165,000	12.1	22.7	55.6	3
Phoenix, Ariz.	308,900	11.9	4.1	98.6	7
Albany, N.Y.	215,000	11.7	17.5	41.4	4
Grand Rapids, Mich.	210,000	11.7	50	116.1	5
Albuquerque, N.M.	180,000	11.6	11.5	55.3	6
San Diego, Calif.	620,000	11.5	22.3	91.2	10
Tucson, Ariz.	229,000	11.5	-1	74.6	6
Indianapolis, Ind.	185,000	11.4	28.2	91.3	1
Colorado Springs, Colo.	345,000	11.2	57.7	85.6	8
Philadelphia, Pa.	240,000	11	6.9	48.4	1

 

US Real Estate Market forecast for 2024

Please see the major metro market reports for 2024 and beyond including Denver, Dallas,  Atlanta, Chicago, San Francisco, Houston, Tampa, New York, Los Angeles, San Diego, Seattle, and Philadelphia.