It looks as if home price growth could finally be slowing down slightly, which would be good news for those currently struggling to get a foot on the housing ladder. According to the article on aol.com, data from Trulia shows demand from both traditional buyers and investors is declining.
Even so, home prices are up by an average 8% year-on-year, but it is the first time since July 2012 that no local market has seen home prices increase by more than 20% year-on-year. Property prices in Las Vegas, Sacramento, and Oakland, increased by nearly 15%, which is about half the gains seen earlier. Riverside San Bernardino, California increased by the highest percentage, at 18.8%.
It is hoped the slowdown in price growth will led to a decline in riskier real estate practises such as flipping and may encourage more realistic expectations from those hoping to sell property. The number of markets seeing year-on-year price declines is now at levels seen before the recession, which is good news for homeowners. Fewer people should be in negative equity, and at risk of defaulting on their mortgages. The four largest metropolitan areas which saw a drop in asking prices were Little Rock Arkansas, El Paso Texas, Hartford Connecticut, and Albany New York. The current slowdown in price growth has not led to more markets seeing price declines, and it is still very much a seller’s market.
Recently home affordability has worsened, with higher home prices and mortgage rates. Even though mortgage rates have come down in the last few months, they are not at the levels seen a year earlier. In April, the national average interest rate for a 30 year fixed rate mortgage was 4.34%, while the average rate was 3.45%.
Home price growth is anticipated to slow to single digits by the end of the year, which would be welcome news for anyone wanting to buy a home, especially since home prices have shot up far in excess of income growth. According to the National Association of Realtors, sales of previously owned homes were up by 0.4% in April, but were down by 9.2% compared to the same period a year earlier. During this time wages have grown by an average of 1-2% which has made it much harder for buyers to come up with the necessary 20% down payment. This year the jobs market is expected to be slightly better which could mean room for bigger wage increases of up to 3% later on this year or early next year.