Coming Soon: “Record High Prices Exceeding Post Recession Highs”
Most people believe it could never happen so quickly, but the rule for investing has always been, “do the opposite of what most people think”. According to Zillow, homes in more than 1,000 cities and towns nationwide either already are, or soon will be more expensive than ever.
With an increase in national home values of 5.7% during the first quarter of this year, home values in many cities and towns have already exceeded their post-recession record highs that were set in 2005 and 2006.
Many of the cities that have already set new record high prices were those hit hardest by the recession. Zillow estimates that nearly 6,800 of the 8,700 cities they cover experienced a decline in prices of 10% or more during the recession. Home values in 527 of those cities have already set new record highs, or are expected to reach new highs by early next year. This is in addition to the more than 500 cities that recently experienced record high prices where there was a less than 10% decline in prices during the recession.
Although this is great news for home sellers, it could be terrible news for buyers that postponed their purchase until a later date. There are still over 7,500 cities and towns that have not yet fully recovered. Hesitant buyers that wait to purchase until next year could miss out on appreciation this year, and could be forced to pay record high prices in 2015. As the lows of the housing recession become a distant memory, so will the opportunity to purchase homes at undervalued prices.
Buyers who are renting property are also cautioned to watch out for rising rental rates. Nationally, rental rates rose 2.7% in the first quarter, compared to the same period last year. Zillow expects rental rates to continue to increase, as inventory levels shrink and mortgage interest rates rise. Inventory levels have fallen month over month in each of the first three months of this year. The time to buy is now!