Property prices have soared to their highest level since at least 2016, according to a Redfin report released on Friday. However, this does not mean that there is a bubble in sight.
Median sales price rose 17% year over year to $ 330,250, according to Redfins' report for the four week period ended March 14. The corresponding offer price was $ 350,972, 10% higher than the same period last year.
This has reaffirmed that the current surge in property values will not end in a crash like it did after 2006, as underwriting is tight and the formation of households is fueling steady buying interest.
"I wouldn't call this a real estate bubble because the demand for homes is really there and buyers can afford these high prices," Redfin chief economist Daryl Fairweather said in the report. "Bubbles burst; I don't see that. "
Redfin’s recent year-to-year comparisons reflect the sharp drop in sales at the start of the pandemic, which carries over the magnitude of the gains observed.
Industry calculations may vary, but most sources agree that prices were record breaking last year. Various measures for last year's median property value range from around $ 250,000 based on revenue to $ 350,000 for price inquiries.
Attom Data Solutions, for example, put the median sales price last year at $ 266,250, an appreciation rate of 12.5% year over year. This is the highest annual price change since at least 2005.
While there may not be another wave of price depreciation like the one after the 2006 bubble, the market is likely to weaken a little, Fairweather said.
"Buyers' best hope is that house prices will grow more slowly, but I don't expect prices to fall," she said.
This is because the supply continues to shrink in relation to the demand. New registrations fell 17% in Redfins report. Outstanding sales increased 21% year over year.
The imbalance between supply and demand has led to "irrational" purchases, according to Fairweather.
"Some people are willing to do anything to win a bidding war to the point where they may overpay," she said.
The percentage of homes that had an accepted offer within a week of entering the market was 44%, down from 32% the previous year, according to Redfin.