Trulia reports that asking prices for residential real estate have increased more than 11% on the year ending in October, and while recent monthly increases have not been that dramatic that prices are rising at an unsustainable level. Analysts are not yet concerned about a bubble, but quickly rising prices often trigger behavior that distorts the market, such as an increased amount of house flipping and more sellers waiting to put their houses up for sale. Price rises are not occurring evenly across the country, however, with some areas seeing more activity than others. For more on this continue reading the following article from TheStreet.
Real estate consumer services and analysis firm Trulia (TRLA) is out with a slew of real estate data, but topping the charts is a new, aggressive attitude from home sellers, who apparently enjoy having the upper hand after five years of little leverage.
Trulia reports that the average home asking price rose by 11.7% from October 2012 to last month, based on data from its Price Monitor.
October saw only an incremental rise in home asking prices, at 0.6%, but the year-over-year figure is the largest jump since the housing bubble popped back in 2007-08.
Apparently, home sellers are hitching a financial ride on the increasingly robust real estate market.
According to recent data from CoreLogic (CLGX), home prices rose 10% from the second quarter of 2012 to the second quarter of 2013 — a figure unsurprisingly close to the 11.7% rise in home asking prices.
"Although October’s asking home prices rose at the second-slowest pace in seven months, prices are still rising unsustainably fast," says Jed Kolko, Trulia’s chief economist. "Even though the market is far from bubble territory, we still see the effects of fast-rising prices, including investors flipping homes and would-be sellers waiting longer to put their homes on the market."
On another front, Trulia reports that metro area home prices in so-called "blue states" are rising at a faster pace than those in red states (12.5% to 11.1%), if only because blue state home prices dropped further in the aftermath of the housing market collapse, representing a "bigger rebound after a steeper decline," as Trulia puts it.
The firm adds that home prices are more expensive in blue states overall, and their unemployment rates are higher, which could mean a rocky recovery for "blue" cities.
"Home prices are skyrocketing in many of America’s bluest metros, like Oakland and Detroit, as the home-price rebound has bypassed most of America’s reddest metros," Kolko says. "But red America shouldn’t turn green with envy at blue America’s recovery: Housing remains much more affordable in red metros than blue metros, and unemployment is lower too."
On one last note, homebuyers considering a rental alternative as home prices rise may need a reality check — especially in San Francisco. Trulia reports that the average rental rate in the Golden Gate city has risen by 10.1% on a year-to-year basis.
That far outpaces the roughly 2% to 3% rise in rentals in big cities such as New York, Boston and Los Angeles as demand rises for new apartments in there.
Yes, that’s a lot to absorb for real estate consumers and industry professionals.
But the housing and rental markets are starting to pick up steam as 2013 draws to a close — a fact not lost on home sellers, buyers in "blue cities" and San Francisco renters in particular.
This article was republished with permission from TheStreet.