U.S. home prices have been increasing since February, which is an interesting trend that many analysts have said is not sustainable – so if house prices in California continue to go up they may be in danger.
Strong price gains and high mortgage rates may affect the housing demand in California. Sales of new and existing homes are robust. Last month, sales of existing homes reached their highest point in a whole decade.
Despite all of this, the strong demand has not reeled in more American citizens to sell their homes. In fact, a number of houses for sale in the Californian housing market has dropped to a low point – it’s the lowest point in 20 years. In all, this has made finding an available property one of the biggest problems for potential buyers.
A lot of homeowners have taken advantage from the rapid price increases across recent years. However, the increases have made it more difficult for them to ‘trade up’ to a bigger house, to upgrade their premises and to strengthen their property position. It has been very challenging with higher house prices in California.
Others may be reluctant to sell their property as they have low mortgage rates and may be put off by the possibility of having to pay higher borrowing amounts. People tend to get comfortable and frightened of change.
The cities with the highest annual price gains in February were in Ore, Dallas, Portland and Seattle. Average rents are also levelling off, which could mean that more Americans may start to get comfortable in rental properties rather than having an intention of buying a home.
Mortgage rates are up from last year’s record lows too. This could place a problem in homebuyer demand and price growth overall. The supply of new homes available for sale in February went up to a seven-year-high of 266,000.
Let’s see where this housing demand will go as house prices in California continue to rise.
Written by Gemma Smith