LIME REALTY GROUP is writing a series of blogs about the perceived housing shortage we’re experiencing on a national level and what’s happening here in Southern Utah.
We left off last time talking about the pace of income growth and how it was falling behind the rising values of properties. When you combine that with higher asking prices for homes, affordability will inevitably knock some buyers on the lower end out of the market. This will also increase the demand for rental properties. A strong demand for rentals will allow investors to continue to buy up low end properties as they become available.
In February, the national median price of a previously owned home was 7.7% higher than it was just 12 months ago. That’s compared to the after-tax household incomes adjusted for inflation increasing only 2% over the year. That’s a weak gain and a difference of 5.7%.
The higher cost of borrowing isn’t helping either, as you know through our blog entries checking the mortgage rate. The last time we checked, the mortgage rate for a 30-year fixed-rate mortgage was at 4.14%. That means the monthly payment for each $100,000 borrowed would cost almost $50 more than it did as recently as October of last year when the rate was around 3.32%.
So we can see that demand continues to be strong. Especially in places like Southern Utah. Places that continue to grow at extraordinary rates. And we can also see that the value of properties will continue to increase at least for the foreseeable future. How can builders and real estate professionals keep up with the demand? We’ll discuss that a little more in the next part of this series. Check back again tomorrow and make sure you make the clear choice for real estate when shopping in the Southern Utah area. Choose Lime! Call today!