What could be good news for home sellers may not be so welcoming for potential home buyers.
For the first time since 1979, the median single-family existing-home price for the San Jose, California, metro area skyrocketed past $2 million, settling at $2,008,000.
“The record-high home prices in most metro markets bring good and bad news,” NAR Chief Economist Lawrence Yun said.
“It’s terrific news for homeowners who are moving ahead in wealth gains. However, it’s difficult for those wanting to buy a home, as the required income to qualify has roughly doubled from just a few years ago.”
In fact, seven of the Top 10 most expensive markets in the United States were in California.
Coming in second to the San Jose area was San Francisco-Oakland-Hayward, with a median single-family home price of $1.44 million, followed by Anaheim-Santa Ana-Irvine at $1.43 million and San Diego-Carlsbad with $1.05 million. The remaining California metro areas in the top 10 include Salinas, Oxnard-Thousand Oaks-Ventura, and San Luis Obispo-Paso Robles.
Naples-Immokalee-Marco Island in Florida, Honolulu, and Boulder, Colorado, also made the Top 10.
The current national median single-family existing-home price stands at $422,100, an almost 5 percent increase from this time last year. The South had the largest share of single-family existing-home sales at 45.5 percent.
The Top 10 metro areas with the largest year-over-year median price increases all posted gains of at least 14.1 percent. Five of the markets were in the Northeast: Dutchess County-Putnam County and Glen Falls in New York; New York City-Jersey City-White Plains in New York-New Jersey; Trenton, New Jersey; and Manchester-Nashua in New Hampshire.
Low Inventory in ‘Outer Burbs’
Carol Christiansen, an associate broker with McGrath Realty Inc. in Mount Kisco, New York, told The Epoch Times that bidding wars are still happening, with listings typically reaching $20,000 over the asking price.“It’s just amazing how the prices have gone up in Putnam and Dutchess counties,” she said. “Of course, this makes it very hard for first-time homebuyers.”
Low inventory is prevalent even in the “outer burbs,” which combined with higher interest rates, is keeping many potential buyers at bay, Christiansen said. In nearby Westchester County—the closest county to New York City—it’s not unusual to see offers as high as $70,000 over the asking price, she said.
Another issue is that many first-time homebuyers are competing with all-cash buyers, according to Christiansen.
“In my 30 years in this business, I’ve never seen so many cash buyers,” she said. “Even if an individual or couple is prequalified for a loan, sellers typically go with the cash buyer because it’s quicker and easier.”
Putnam and Dutchess counties contain mainly single-family homes and so lack many more-affordable options, such as co-ops or condos, which are more plentiful in Westchester County.
Still, Christiansen said she never discourages anyone from embarking on that search for the American dream.
“If they’re renting, they’re just paying someone else’s mortgage,” she said.
Christiansen tells all of her house-hunting clients to prepare by first getting prequalified by a lender, saving at least 10 percent to 20 percent of the listing cost for a down payment, and remaining patient.
“I know it can be frustrating, but if people are willing to be patient, they will find something they love,” she said.
Christiansen said a client whom she worked with for almost two years recently found a home in Putnam County.
“It was a long road, and they ended up paying $20,000 over asking, but the family is very happy,” she said.
19 Days on the Market
The El Paso metro area saw 19.2 percent gains during the second quarter—one of the nation’s highest. Shy Rodriguez, president of the Greater El Paso Association of Realtors, told The Epoch Times that she was surprised to hear that news.“We’re not like Dallas or Houston. We’re a big little city and have a pretty steady market here,” she said.
At the end of July, the median price of a single-family home in El Paso was $265,000, and 773 homes had been sold that month. Rodriguez said homes typically spend about 19 days on the market. Inventory in El Paso is also steady, with 2,471 homes currently available.
“We can find something for most people who are looking,” she said. “Plus, our lenders here go above and beyond to help our buyers with lots of special loan programs.”
El Paso is also home to the Fort Bliss Army base, and Rodriguez said many of her clients are military personnel.
“We also see a lot of first-time homebuyers and retirees from other parts of the country,” she said. “I also recently helped buyers who were relocating from San Jose who were looking for more-affordable options.”
Rodriguez, an agent with Century 21 The Edge in El Paso, said there are still a few properties listed for less than $200,000. In fact, she said she was preparing to list a 1,500-square-foot single-family “fixer-upper” for just $132,000.
“This would be perfect for investors or first-time homebuyers who are looking to save money and don’t mind doing the work to upgrade the home,” Rodriguez said.
Known as the “Capital of Mexican Food,” El Paso is also a border town where one can easily see Juarez, Mexico, from the freeway.
Increased Mortgage Rates
On the national front, the NAR report noted that increased mortgage rates are still contributing to higher monthly payments for the average U.S. homeowner.According to its report, the monthly mortgage payment on a typical existing single-family home with a 20 percent down payment was $2,262, an 11.1 percent increase from $2,036 in the first quarter. Families on average spend 26.5 percent of their income on mortgage payments, which is up from 24.2 percent in the previous quarter. Limited inventory is another factor affecting home prices, as bidding wars push prices upward.
The report’s sole silver lining for buyers is that nearly 10 percent of the metro markets—22 of them—did see a home price decline in the second quarter.
“Previously fast-gaining markets took a breather in the past quarter, including Nashville; Durham [in North Carolina]; Austin [in Texas]; and several Florida metro areas,” Yun said.
