It’s official in the mainstream press(although looking in the rear-view mirror is often a bit late): housing prices across the board are rising: Prices for single-family homes climbed in almost 88 percent of U.S. cities in the fourth quarter as the housing recovery broadened. The best-performing metro area was Phoenix, where prices increased 34 percent from a year earlier. I am estimating escalation in Manhattan this year of around 10-15% and I fear that escalation has already happened, with jaw-dropping speed…….just as we predicted a few months ago. It will take a while for many buyers to adjust to the ‘new normal’. Once upon a time, $ 1,000/sf seemed like a steep price to pay……now that’s what you pay for a storage room. The effects of LUXOFLATION have taken hold. Remember what Mayor Bloomberg said a few years ago: until the housing market recovers, there will be no recovery. Now one could be certain that economic recovery has officially begun.
The median sales price rose from a year earlier in 133 of 152 metropolitan areas measured, the National Association of Realtors said in a report yesterday. In the third quarter, 120 areas had gains. An improving job market and low interest rates are driving up prices by fueling demand for a tightening supply of listings. The national median price for an existing single-family home was $178,900 in the fourth quarter, up 10 percent from the same period last year. That was the biggest gain since 2005, according to the Realtors group.
So what’s next? Rising interest rates? Sub-prime mortgages? Excessive home equity loans? Hopefully the folly of previous cycles is not repeated…..