Issue: Median home prices are continuing to soar in this year’s second quarter, with some metro areas experiencing faster growing rates in comparison to this year’s first quarter.
Argument: Real estate price increases are due to the lack of homes on the market as well as the higher rates on home loans and mortgages. Home improvements are also playing a role on this inflation, or actually, the lack thereof.
Supporting Evidence: The National Association of Realtors (NAR) claimed that 163 of 176 metro areas experienced rises in housing prices in the second quarter of 2015. Realtors, in addition, also witnessed an active spring selling season due to buyer attempts to obtain a lower home loan rate. The fastest increase on prices happened to take place on Florida’s east coast, where prices are increasing as much as 20% from last year, while suburbs in Maryland, such as Stamford in Connecticut and Kingston in New York, were among the few metro areas to experience declining home prices. Home prices remained at the top of the list in California, where suburbs like San Jose still have a median price tag of $980,000. Also, low supply in the housing department is also due to homeowners owing more than the house is actually worth as well as the decline in home improvements. Look at the diagram pasted below for a visual representation of this growth.
Effect on Economy: The increase of home prices causes inflation. While this increase benefits the seller, it limits options for the buyer and causes a more aggressive market as well.
Analysis: This analysis kind of ties into the effect on the economy. While I’m not that well-hearsed on economic matters currently, it’s hard to think that this increase in pricing has little effect on an already struggling economy in America. Real estate is probably the most personal industry universally because it ties into our individual need (though, it should be a right) for shelter. It’s astounding that you always see cookie cutter neighborhoods and apartment complexes constantly being constructed, but the housing market is still a cause for inflation and an area for concern for buyers. I’d like to hope that the housing market would begin to boom, but unfortunately, owners are holding onto their homes because of the amount that they still owe on the home, even if the house is valued way less than the dues that are present. If the housing market were to boom, metro economies would largely benefit from their growing populations.
