The Case Shiller home price index rose again in 2016. This index is a leading that measures residential real estate prices, by tracking changes in the value of residential real estate. It tracks the market through 20 metropolitan areas.
The data released on May 31st shows that home prices continued increasing across the country over the last 12 months. The report showed a 5.2% increase over the last 12 months, down 1/10 of a percent from the previous report of 5.3%. Portland, Seattle and Denver lead the way with all three reporting over 10% gains.
David M. Blitzer Managing Director & Chairman of the Index Committee at S&P Dow Jones Indices who produce the Index said “Home prices are continuing to rise at a 5% annual rate, a pace that has held since the start of 2015. The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates.”
New home builders are not supplying enough new homes across the country. This limited supply is a major factor in the increase of home prices. Here in South Florida developers have not increased supply yet, while they have some major developments in the planning and development stages. It looks like they are going from building 500 home developments to 14,000 home cities. Condo’s on the other hand are a different story. We drove through Miami and then sailed in Biscayne Bay over the weekend and everywhere we looked were cranes for new high rise condo’s. The rest of South Florida has condos in various stages of construction.
Home prices are close to near record highs across the country as demand increases and supply is tight, while the market does not see an unusual increase in borrowing that could show people are trying to buy that second or third property. This bodes well for home sellers this seasons, but can pose challenges for buyers, especially first -timers who may be priced out of the market as supply remains thin.