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
- They are rising, nationally at close to a 6% rate
- The 6% annual gain is also representative of the home market in the larger cities of NC, where we have the most frequent reading
- 6% is well above the current inflation rate, so owners are now seeing a good return on their home as an investment
- But 6% is above the average wage increase, so it is making home affordability tougher
- So home sales – and home appreciation – will rely on continued relatively inexpensive financing as well as purchases by buyers with strong incomes
- 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