Since the housing crisis in the last decade, we’ve seen a jump in home values. The housing market has been recovering, which leads to the rise of the value of homes. While this rise was initially good news for those wishing to sell homes, it has since become an issue as prices continue to drastically rise. However, price rise has recently slowed down because buyers have found alternate solutions to paying exorbitant prices for a new home.
Lowering Home Values
Increases in specific housing markets have begun slowing down after seeing continuous increase, often into the double digits. In 2016, the rise of home values has cooled down, particularly in cities in the western United States, like Denver, San Francisco, Austin, and many others. San Francisco, the most expensive city in the country, has seen a home value increase of only around one percent this year, as opposed to the drastic rises that happened the last several years.
This soaring value of homes occurred within the last five years, with trends all over the country, but mainly concentrated in the West. It’s believed that these rising prices were due to tech companies and other start-ups congregating in these western cities, so the demand for housing rose and more people flooded into the area. Over this period, the nationwide gain in home value was 22 percent, but in Denver, San Francisco, and Austin, home values rose 71, 66, and 54 percent, respectively.
Since this rapid rise in the housing market, the continuous climb of home values has begun to slow down. For example, in Denver, the median increase was 8.1 percent as compared to 12 percent from the year before. This trend is being seen in various major western cities, though it’s important to note that the housing market is still growing.
What are People Doing?
It’s likely that the rise in home values has begun to slow down because people are simply refusing to pay such high prices for homes that are not worth that much money. Often families, these buyers have decided to look outside of the cities, into the surrounding suburbs. Homes are often much cheaper there and the higher demand has resulted in more developments and apartment buildings being built. Companies have also stopped heading to the same cities, because rent and housing is just too expensive. Buyers are spreading outward in an attempt to cut costs.
While this cooling off in some cities is good news for many people looking to purchase a home, the housing markets in some cities are still continuously rising at a steady rate and showing no indications of slowing down. In Portland, homes values went up 20 percent, compared to only 13 percent a year earlier. The same trend was seen in Seattle as well. It’s likely such trends will fluctuate in cities and suburbs across the country, as people move and shop around, looking for the best deal. Demand and prices will continue to vary.