Summit: Home Prices in West Appreciating, Population Shifting
Summit Valuations LLC, Des Plaines, Ill., said rapid home price increases in the West represent a combination of factors, including job growth, low inventory and steady population shifts.
The company’s April Residential Real Estate Market Overview, reporting data compiled in February, said while home prices have increased in all four U.S. regions (Northeast, Midwest, South and West) over the past five years, increases in the West have proven strongest and are likely to remain strong for the foreseeable future.
Summit Chief Valuation Officer Mark Melikian noted California, Colorado, Oregon and Washington are collectively home to a significant percentage of high-tech and creative marketing companies. Well-paying jobs in these industries are being created in metro areas such as San Francisco, Los Angeles, San Diego, Denver, Portland and Seattle.
Not surprisingly, home prices are increasing the most in the West amid tight inventories.
“At what point these home price increases create unaffordable housing conditions remains to be seen,” Melikian said. “However, mild climates and well-paying jobs continue to attract new residents to these regions. It appears likely the price increase trend will continue into the near future.”
The report noted despite high housing costs in some markets in the West, data show homebuyers are moving out of the Midwest and Northeast and heading to the West and South, which has resulted in home prices appreciating at a greater percentage in those regions.
“States in the West and South tend to have relatively milder winters which is attracting homebuyers and contributing to increasing home prices,” Melikian said. “An aging baby-boom population seeking mild climates for their retirement years is one reason these regions have experienced a higher gain in home prices.”
The report noted in February the seasonally adjusted number of homes sold and the unemployment rate both decreased year over year. The median sales price, the months’ supply of housing, the pending home sales index and mortgage interest rates all rose.
On a regional level the South had the highest number of existing home sales; the West had the highest median price. The South saw a month over month gain in the number of seasonally adjusted existing home sales while all other regions saw declines. The Northeast and Midwest experienced declines in the median sales price month over month, while prices in the South and West increased.
