Why are Home Prices Rising So Fast?

by Isaac Benmergui, Esq on June 12, 2017

home pricesHome prices just keep rising, and in many places like Miami, it’s putting home ownership out of reach for individuals making twice or even three times the average income in their cities. So if the average worker can’t afford a home, why do prices keep rising?

Here are a few reasons, according to the experts.

  1. Supply is low. Historically, housing starts, or the measure of permits issued to begin construction on new homes, have been in the range of about 2 million per year. But since 2009, housing starts have been low just about every year. In March 2017, builders were on pace to complete just 1.25 million homes nationwide this year. When you add up the deficit of homes for every year from 2009 to 2017, it becomes millions of homes worth of inventory that should be there but isn’t.
  2. Competition is high. Low inventory wouldn’t make a huge difference on it’s own, but combined with high demand leads to huge increases in home prices. Currently, the nationwide inventory is 5.4 months, which is slightly in favor of sellers. As we know, however, some markets like Miami are much hotter. An entire new generation is trying to get into the home-ownership game, and without more inventory being added, prices will only go up from here.
  3. The market is moving fast. The only way to compete in a market with tight supply is to get there first. As a result, the average time on the market is declining rapidly, from 60 days last year to just 49 days on the market as of March 2017. When you factor out the time it takes to close a home loan, that means homes are only on the market for about 4 days before they accept an offer!

Call Miami Real Estate Lawyer Isaac Benmergui at 305.397.8547 and set up a no charge, no obligation consultation to discuss your case. We have over a decade of experience handling Real Estate and Civil Litigation cases throughout Miami and South Florida, and will use our expertise to help your case to the best of our abilities.

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