There have been numerous articles in recent months about the surge in home prices, so lets take a deeper look into some of the numbers and see what is happening in various parts of the US, including the Santa Barbara area, and why prices are rising across the country.
1. Builders are Raising Prices & Limiting Supply. There are a number of major home builders across the US who — because of rising costs associated with land acquisition, labor and materials — are having to raise their prices. As long as builders are feeling the squeeze for key components, the trend will likely continue. In addition, builders are also limiting supply in an attempt to keep prices high, while also managing order volumes so as to not get over-committed on developments and allow appraisal values to reflect market conditions. This obviously is not an ideal scenario for the consumer, but it is one that certainly is good for home builders’ bottom lines and profit margins as they maximize profits from communities where construction is active.
2.Home Indexes on the Rise. The Pending Home Sales Index, which forecasts forward market activity, was up 7% for 2012 and is also showing increased activity levels for 2013. Barclay’s has also forecast a 10% rise in prices for 2013 and 8% for 2014, according to Stephen King, an analyst with Barclay’s. The stabilization of market prices in 2012 and a slowing of foreclosures and short sales have led to an acceleration of existing home sales and a more rapid rate than was seen in the 1990’s.
3. Vacation Home Sale Increase. The market for vacation and secondary residences had all but dried up in 2010, but now there are strong signs that people are feeling more comfortable about the acquisition of a vacation home or secondary home as the market has stabilized and interest rates are still at extremely low levels. People are also on the move. Texas seems to be the state of choice, with three of the top six relocation destinations. The top six are Houston, Orlando, Chicago, Las Vegas, San Antonio and Austin.
Of course, Santa Barbara property and especially coveted Montecito homes are especially coveted by those buyers who can afford a vacation residence on “The American Riviera.” This mountain and ocean view home — one of my current listings — is an excellent example. Click here for listing information.
Overall, several States are seeing prices rising, with double digit surges and, according to the latest data from CoreLogic, home prices are increasing at the largest year-over-year rate since March of 2006. and March also marked the 13th straight month for consecutive home-price increases. Much of the demand is stemming from limited supply and strong investor buying, especially in the West where double digit rate increases have been more prominent.
For example:
Nevada +22.2 %
California + 17.2 %
Arizona + 16.* %
Idaho + 14.5 %
Oregon + 14.3 %