Mike Walden: Are Home Prices Still Rising?

The level of home prices is important for two reasons.  For homeowners, the price of their home is a big determinant of how much equity, or wealth, they have in the home.  For potential buyers, the level of home prices is a big factor in home affordability.  So give us an update on what’s happening to home prices today.

Mike: Summary Answer

  1. They are rising, nationally at close to a 6% rate
  2. The 6% annual gain is also representative of the home market in the larger cities of NC, where we have the most frequent reading
  3. 6% is well above the current inflation rate, so owners are now seeing a good return on their home as an investment
  4. But 6% is above the average wage increase, so it is making home affordability tougher
  5. So home sales – and home appreciation – will rely on continued relatively inexpensive financing as well as purchases by buyers with strong incomes
  6. This is one reason why sales of higher priced homes – who are bought by higher income households – are doing better than sales for first-time buyers