Weekly Special | November 20, 2016

Appreciation Rates To Remain High For Homes

The window of people who purchased their homes at values higher than today’s market continues to narrow.

Home values have been pushing higher and now appear to be moving upwards at an accelerating rate. This means that only homeowners who purchased from early 2005 to late 2010 have negative equity in their homes.

The graph above shows median home values each month, expressed in terms of price per square foot of heated and cooled space.

The solid green line shows the one-year trend of average of home values, and this trend is on a rapid rise.

How fast are home values moving?

Well, when looking at year over year home values (comparing a month during a year to the same month in the previous year), we see that the median home value in October was 17% higher than the median home value in October of 2015.

Thus far in November, the median home value is up 20% over the median home value last November!

Are we really getting ready to hit a period of appreciation rates that go from the high teens to low 20s?

I expect appreciation rates for homes priced below $350,000 to remain above 10% for quite some time, as the low supply of homes (below $350,000) has created a hole in the market that can no longer be filled by building single family detached homes.

The original one-page Weekly Special PDF is still available.