By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

 
Home values have bounced back to pre-recession levels in 60 of the 300 major metropolitan areas covered in a quarterly market report from Zillow. That’s great news for homeowners, but is already putting a damper on affordability in a handful of those metros – namely, San Francisco, Los Angeles, San Jose and San Diego – where the share of residents’ incomes devoted to housing is already exceeding historic norms.
 
Overall, home values in the U.S. climbed 5.7% in the first quarter of 2014 compared with the same period last year, averaging $169,800 at the national level. U.S. home values are expected to climb another 3.3% through the first quarter of 2015.
 
Home values remain 13.5% below their 2007 peak, although the housing recession is now well over for the majority of cities across the U.S.
 
What does this mean for buyers in sellers in your corner of the world?
 
If you’re a buyer in San Francisco, Los Angeles, San Jose or San Diego, you are likely going to run into affordability problems as prices and interest rates continue to rise. These are also low-supply markets, which tends to result in extremely competitive bidding situations.
 
The two best pieces of advice for you right now are to act fast and be patient. In order to act fast when properties become available, make sure you’re pre-approved for a loan, have your down payment ready and all your paperwork ducks in a row. Work with a Realtor who knows the local market and can also move quickly.
 
Being patient just means that you may be in for a longer ride than you initially expected. Be realistic and don’t compromise your financial situation just to get in the market.
 
Also in Zillow’s report, we learn that among over 6,700 cities and towns that experienced home value declines of 10% or more during the recession, values in 527 have either fully recovered or are expected to recover by this time next year.

That’s great news for homeowners who may have been upside down on their mortgages or would-be sellers who were waiting to make a move until a rise in values made it possible. This paints a good scenario for these markets for the next few years.
 
The bottom line is this: overall, our markets have recovered or are recovering well from the post-recession fallout. Some markets are back to crazy-town in terms of prices increases, which reinforces the first rule of real estate never changes: location, location, location.
 
Sellers overall will have an easier time in the coming years, while buyers in a handful of markets will struggle to keep up.
 
Stay tuned!

 

Advertisements