November 16, 2015
Home Prices Rise Fastest for Most Affordable Homes
This story was found this from http://www.corelogic.com/ by Frank Nothaft great video on the rising home prices and how they explain the increase of existing resale homes.
They also mention that lower priced investors have helped with the appreciation on the lower priced homes. He goes on to say that he thinks that home prices will see a 5% increase in price in 20160. That is great news for the real estate investor.
“These trends are shown in Exhibit 1: The highest-priced tier – those homes valued at more than 25 percent above
their local-area median price – appreciated 3.9 percent in the year
ending August 2015 and 30 percent from their post-Recession trough. In
contrast, the lowest-priced tier – those homes valued at more than 25
percent below their local-area median – appreciated 9.3 percent during the past year and were up 51 percent from their post-recession trough.”
He is basically saying that higher end did not increase at the pace of the lower end. That to me is pretty typical because of the square footage. The more the square foot the less the appreciation in most all cases. You probably could not say that for New York and other similar markets. You can say it for the Ohio market though.
“A second reason for the faster price growth within the lowest-price tier
has been strong demand for these homes by investors supplementing the
owner-occupant bid. Investors have generally acquired moderately priced
homes rather than million-dollar homes, thereby adding to demand for the
lower-priced segment. The combination of investors supplementing demand
for lower-priced homes and new construction adding to supply for
higher-priced homes has helped create the differential in appreciation
by price tier.”
I agree with what he is saying and that is usually the case in these types of markets. I remember Phoenix in 2005-2006 the lower median home prices went up almost everyday it seemed like. I had a home that I sold three times in 6 days for $10,000 dollars more than when I listed it. WOW that is how it was at the time.
Having the right real estate in the right resale markets is crucial to your success in Investment Real Estate. Oh by the way if your looking for a home to live in then this is an important aspect to look at. you never know about the future. Brett Young Howard Hanna