![]() The cities that have experienced the most rapid home price appreciation include Denver, Phoenix, San Diego, Seattle and Tampa. In April, for example, annual home price appreciation for suburban and less dense cities reached 12% versus 2% for dense urban areas. In short, whereas rapid home price appreciation in the mid-2000s occurred despite record high supply, it is now occurring because supply is at record lows.įinally, the Covid-19 pandemic has also had an important influence on the U.S housing market: Home-owners have shifted from densely-populated urban areas to suburbs or locations that are deemed to be more desirable. It is a key reason why potential home buyers are frustrated when they have to enter a bidding war and pay more than the list price to secure a transaction. In these circumstances, any increase in demand can have a large impact on home prices. Since then, housing inventories have shrunk steadily and they have fallen to just 1.2 million units recently, an all-time low. The rapid price appreciation then mainly stemmed from the expanding pool of potential new buyers as credit conditions were relaxed. During the housing boom of the mid-2000s, the existing inventory of homes was substantial, reaching a peak of 3.8 million units in 2007. For the most part, financial institutions have also been more circumspect in ensuring that borrowers have the wherewithal to service their debt, although there has been a pickup in subprime mortgages recently.Īnother important difference is the underlying demand-supply conditions for housing. ![]() This is evinced by a dearth of products that are structured to make homes look affordable such as teaser interest rates that start out low but can rise significantly over time. One key difference from the mid-2000s is that credit standards for mortgages are considerably stricter today. Fort Washington Investment Advisors Bloomberg Freddie Mac S&P CoreLogic Labor of Bureau & Statistics ![]()
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