Is it possible for everyone to be priced out of the market? That is certainly what it has felt like is occurring over the past few quarters as home prices continue to push forward like a splenetic thunderhead.
Currently, as realtor.com reports, the most recent data from the S&P/Case-Shiller Home price Index shows the housing market is experiencing year-over-year increases in the 5 percent range. A 5 percent annual increase is roughly twice the rate of inflation, meaning the price of housing has to slow down or there won’t be anyone left to buy it.
Obviously, the market is going to take care of itself before everyone gets priced out, but the question currently on everyone’s mind is when will that happen? In some major metro areas around the country, home appreciation is already starting to slow.
For every Portland, Seattle, and Denver out there, there is a city on the other end of the spectrum that still has homes gaining value, but at a much slower rate. Washington, D.C. is one of those cities. In March, the cost of purchasing a home in Washington, D.C. was only 1.5 percent higher than one-year prior. This is due in part to last year’s strong spring that the nation’s capital experienced in terms of home sales. In fact, the last few years have been strong and the current year’s increase puts it on par with where the city was last year.
The fact that Washington, D.C.’s home prices are already very high is another factor in its comparatively small year-over-year increase. Single-family detached homes and row houses within the city limits usually sell for about $750,000 and up.
Chicago also experienced a small appreciation for its homes with a 1.9 percent year-over-year increase. New York (2.7 percent) and Cleveland (2.8 percent) were next on the list.
