Home price appreciation continues to accelerate, both nationally and locally. Today’s home prices are driven by the simple concept of supply and demand. Pricing of any item is determined by how many items are available compared to how many people want to buy that item. As a result, the strong year-over-year home price appreciation is simple to explain. The demand for housing is up while the supply of homes for sale hovers at historic lows.
Take a look at these three maps to show how this theory continues to affect the residential real estate market nationally.
Map #1 – State-by-state price appreciation reported by the Federal Housing Finance Agency (FHFA) for the first quarter of 2021 compared to the first quarter of 2020:As the map shows, certain states (colored in red) have appreciated well above the national average of 12.6%.
Map #2 – The change in state-by-state inventory levels year-over-year reported by realtor.com:Comparing the two maps shows a correlation between change in listing inventory and price appreciation in many states. The best examples are Idaho, Utah, and Arizona. Though the correlation is not as easy to see in every state, the overall picture is one of causation.
The reason prices continue to accelerate is that housing inventory is still at all-time lows while demand remains high. However, this may be changing.
Is there relief around the corner?
The report by realtor.com also shows the monthly change in inventory for each state.
Map #3 – State-by-state changes in inventory levels month-over-month reported by realtor.com:As the map indicates, 39 of the 50 states (plus the District of Columbia) saw increases in inventory over the last month. This may be evidence that homeowners who have been afraid to let buyers in their homes during the pandemic are now putting their houses on the market.
But what about in our local Long Beach real estate market?
In our local market, inventory remains critically low. In Long Beach, for example, the inventory of single family homes for sale went from a 1.1 month supply in April 2021 to a 1.3 month supply in May 2021, but that is still 31.6% below this same time last year.
We’ll know for certain as we move through the rest of the year. What we do know is that a recent survey found that 6% of homeowners who want to sell in the next 2-3 years said they would list this year … if only there were homes for sale in their price range. In fact, 91% said they would sell their homes sooner if they could time buying and selling perfectly. Buying and selling has always been a tricky balancing act, but in an extreme seller’s market (like the one we’re in now), it has become even more so.
That doesn’t mean it’s impossible, though! We’ve helped a number of clients create successful transition strategies. One of the first things we do is look at whether you should sell your home first or buy your next home first.
If you’re interested in selling your home but you’re worrried about buying and selling, give us a call at 562.896.2456.