The enthusiastic article (Sept. 14, “Home prices continue upward swing”) about local home prices needs to be taken with a grain of salt.
There is no doubt that we are seeing some price increases but much of it is artificial. Sellers should not be tempted to add 42 percent to whatever price they may have gotten last year. The high increase is because last year there were more foreclosed properties sold at lower-than-normal market prices, which drove the median price down. Now there are fewer of these sales happening, along with more high-end sales, which drives the median price up and makes it appear that there is a giant recovery taking place.
A second factor is the lack of inventory. There is a good demand for homes but only a limited supply. People who might be considering a move to another location are not putting their home on the market as they don’t have enough equity to purchase a home in another area. Others who might be moving up to a larger or better home are sitting on the sidelines because of economic uncertainty about employment.
The market is improving but not at the rate indicated in the article.
Arthur G. Rahn
Certified General Appraiser