Home prices rise in April over same period last year, but availability still a struggle

This year, spring sprang early for the housing market. The buying season’s typical annual start came about a month early this year.

The story continues to center on inventory and the lower level of available homes for sale, in existing as well as new construction. Demand continues strong nationally, with values increasing ahead of inflation, and supply is still behind demand.

According to Zillow, which is occasionally accurate, a tight market is apparent in areas we may not have suspected, like Minneapolis/St. Paul, where values are up 7.1 percent (year over year) and supply is down 18 percent, or Cincinnati, where values are up 6.4 percent and supply is down 14.9 percent. Even Detroit, devastated during the recession, had a solid 10-percent value increase, with supply down 14.4 percent.

High home value appreciation (year over year) took place in Tampa Fla., Washington, D.C., Dallas and Seattle, which led the way with 11.3 percent. Portland and Denver continue to position themselves with +/- 10-percent appreciation, while enjoying good economies with future potential.

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Nationally, studies have pegged appreciation levels between 5.9 percent and 6.9 percent over the past year. According to Realtor.com, 10 of the Top 20 (hottest) markets across the nation are in California, while other cities include Dallas at No. 3, Denver No. 4, Colorado Springs No. 7 (yes, Colorado Springs), Boston at No. 10, and even Detroit at No. 19.

Denver is one of the most consistent cities for real estate growth and stability since the end of the recession in 2012. The Case-Shiller home price index for Denver set a record in January at 190.75. This means local home resale prices averaged 90.75 percent higher than they were in January 2000.

Neither the small interest rate increase (1/4 percent) that the Fed recently imposed, nor a couple other such increases by years’ end, are expected to dampen homebuyer demand, unless the Fed unexpectedly raises rates four more times over the next year.

Tight supply and higher prices are likely to continue unless construction provides more options for both first-time and move-up buyers. More new construction is needed to diminish buyer frustration.

With low inventory, rising incomes, improved employment and still historically low rates, demand will remain strong.

New homes are selling and builders are trying hard to keep up. But we can’t blame the builders as they deal with increased land cost, local codes, increased restrictions, environmental guidelines, insurance, lending controls and skilled labor shortages.

U.S. homebuilders built an average of 1.5 million homes each year for the 50-year period prior to the recession. The U.S. needs 1.2 million new homes a year built to keep pace with the population growth and another 300,000 homes just to replenish those demolished each year. That means we should have built 12 million new housing units over the past eight years. Instead, we’ve built 6.5 million units, mostly for rentals rather than for homes or condos. Builders are ramping up but it could take years to close the gap between demand and supply.

It has been and will remain a competitive, fast-moving market for the foreseeable future. Buyers and sellers (who will be buying) should meet with their chosen professionals to decide an appropriate business plan. Give yourself enough time to get financing in order, get pre-approved and find an experienced real estate broker you can trust before jumping into the market. Let experience help provide you with an important competitive edge.

For more information, contact LIV Sotheby’s International Realty listing broker Steve Blank at 303-520-5558. To service all your real estate needs, please visit LivSothebysRealty.com.

– LIV Sotheby’s International Realty, the exclusive Board of Regent for the Who’s Who in Luxury Real Estate, has 13 office locations in the Denver Metro and surrounding areas, including Boulder, Castle Pines Village, Cherry Creek, Clayton Street, Denver Tech Center, Downtown Denver, Evergreen and the resort communities of Breckenridge and the Vail Valley. For more information, call 303-893-3200. To service all of your real estate needs, visit LivSothebysRealty.com.