Home Prices are Going Up and so is Buyer Confidence

Posted by: BIA Bay Area on February 14, 2013

It’s no secret that times have been tough over the past few years for home buyers and builders alike. With fluctuations in markets and the economic downturn it was hard to see a light at the end of the tunnel. Fortunately as we venture into 2013 we’re seeing a turn for the better, something some feared would never come.

According to the National Association of Realtors quarterly report, “…The national [home] price showed the strongest year-over-year increase in seven years.” Inman points out that nationwide housing prices are not only going up but “for-sale inventory hit its lowest level in 12 years.” Is this finally the turn around?

The median sales price jumped 10% nationally Q4 1012 and is the highest jump the nation has seen since Q4 2005. Lawrence Yun, NAR’s chief economist stated, “Home sales are being fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising at faster rates. Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play.” She also added that more housing construction is needed to relieve pressure in the market.

According to the report – San Francisco, Fremont, Oakland – saw a 28.3% change $462,300 Q4 2011 to $593,220 Q4 2012. Likewise a U.S. housing affordability index created by NAR saw a record high in 2012 to 193.5 from 186.4 in 2011.

As home prices increase, the economy’s affordability index also increases, so as home prices rise the conditions should stay favorable with individuals seeking out new homes. Buyers are more confident now then they have been in the last several years.  The increase in pricing and buyer moral can only mean great things for the home building industry, especially in the Bay Area, as new home sales is over performing and remaining steady through the first of the year. Let’s look forward to what 2013 has in store.

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