If you were thinking about buying Coastal Delaware real estate, now is the time to make up your mind.
The long-awaited housing recovery is in full swing. Home prices shot up in America's largest cities in May, rising at a pace not seen since the bubble days, according to a closely watched gauge.
The recent Standard & Poor's/Case-Shiller index of 20 large U.S. cities indicated that average home prices across the 20 cities have now reached their spring 2004 level. For the first time, two cities — Denver and Dallas — surpassed the peaks they reached before the 2008 financial crisis. All cities tracked by the index saw prices rise from a year earlier and the previous month.
Low mortgage rates, a shortage of homes for sale and heavy investor demand have sent home prices sharply higher this year, providing an economic lift but also sparking concerns that some markets are getting overheated.
Many of the cities with the largest price gains are where housing crashed hardest when the bubble burst.
Las Vegas and Phoenix, two cities where prices fell hard during the bust, have come roaring back, in large part because investors have scooped up many foreclosed properties to flip or rent out. Southern California price increases maintained their breakneck pace in May.
Two years ago buyers were getting splinters from sitting on the fence, but that's certainly not the case anymore.
With interest rates and home prices on the rise, there's some real panic buying going on. Home shoppers are suddenly finding themselves priced out of homes they had been eying and are in a rush to lock in now.
Rising prices encourage greater home construction, which expands inventory levels and eases pressure on prices.
Sales of newly built homes in June rose at the fastest pace in five years, another sign the recovery is strengthening. Housing has helped drive economic growth at a time when other parts of the economy have languished, such as manufacturing and business investment.
New-home sales make up only a small part of the market, but they have an outsized impact on the economy. Each home built creates an average of three new jobs and generates about $90,000 in tax revenue, according to the National Association of Home Builders.
Rising home sales tend to lead to more spending at furniture and home supply stores.
The number of new homes available for sale at the end of June was 161,000. Rising demand and a tight supply of available homes for sale have pushed up prices. The median price of a new home in June was $249,700, up 7.4 percent from a year ago.
Rising mortgage rates could slow sales in the coming months. The average rate on a 30-year fixed mortgage has jumped a full percentage point since early May and reached a two-year high of 4.51 percent in late June.
Still, mortgage rates remain historically low and home prices remain affordable. June’s increase in sales could reflect efforts by some purchasers to buy homes before rates rise further.