Real Estate Prices are Rising
Homes prices appear to be rising again after falling for more than five years, according to Bloomberg.com/news. All the major sales price indexes show that there have been modest national increases in recent months, even after adjusting for seasonal patterns.
When foreclosures and distressed sales are excluded from the data, prices are up even more. The asking-price index, a leading indicator of sales prices published by Trulia Inc., climbed at an annualized rate of 3.3 percent in the second quarter of this year, adjusted for mix and seasonality, and rose in 84 of the largest U.S. metropolitan areas.
For now, the increases are widespread. For the real estate market and housing policy, this is cause for relief, but also for some concern. One immediate effect of the price turnaround is that inventory tightens. In the past year, beginning even before prices rose, the inventory of listed homes shrank 20 percent, due to fewer foreclosures for sale and little new construction. Smaller inventory contributes to price increases because when there are fewer homes available, sellers can ask more.
In the longer term, if rising prices last, inventory will grow. Higher prices will encourage more owners to sell, including some who have been “underwater” on their mortgages, as well as banks holding portfolios of foreclosed homes.
In Colorado, Denver Development Services’ office is issuing more building permits and site-development plans than a year ago, a sign that new construction and basic home improvement projects are on the upswing.
Building permits issued by Denver Development Services during the first six months of the year were up 13.5 percent compared with the same period last year. The numbers represent the city and county of Denver only and not the metro area.
For more information on Denver Homes, visit www.DenverRealEstate.com.
