Summit Valuations, LLC, a full-service valuation company, has released its January Residential Real Estate Market Overview based on data compiled in November 2016. The report includes analysis from Summit Chief Valuation Officer Mark Melikian, author of the report, and focuses, in part, on current housing supply and new housing starts and the impact on the real estate value appreciation and housing affordability in the near future.
“The data clearly indicate that we’ve been in a seller’s market for the past few years and it’s having an impact on affordability,” Melikian said in his report. “The information we’re seeing now also suggests that we are not likely to see real estate continue to appreciate at the same rate it has in the past. Statistics from the National Association of Realtors show the median home price has risen by 42 percent from 2011 to 2016. Since the median household income has risen only 17 percent over the same period, this type of price appreciation is not sustainable over the long term.”
Real estate economists maintain that a balanced housing market has anywhere from five to seven months of housing supply. To balance the seller’s market, more housing supply is needed, which means an increase in new-home building, Melikian said.
“Over the past 10 years … the need for new home construction (was) nearly 1.5 million units per year to keep pace. However, annual housing starts averaged only 870,000 units from 2007 to 2016, leaving a housing shortage as evidenced by the current levels of inventory.”
As for the data in this month’s report, the unemployment rate, the month’s supply of housing and the pending home sales index all decreased year-over-year. Mortgage interest rates, the median sales price and the seasonally adjusted number of homes sold all increased.
On a regional level, the South had the highest number of existing home sales and the West had the highest median price. The Northeast experienced the highest increase in the number of seasonally adjusted existing home sales at 8 percent month-over-month. The Northeast also experienced the highest increase in median sales price at 2.7 percent month-over-month, the report stated.