The housing market doesn't seem to be cooling down anytime soon, with home prices reported to be up just over 20% in April compared to a year ago, according to the S&P CoreLogic Case-Shiller National Home Price Index released on Tuesday.
The good news? That's less than the increase in March. So there you have it.
Meanwhile, homes are being flipped at the highest rate since at least 2000. Given the booming housing market, if you were looking for a home that needed fixing up last year, you likely found yourself competing with flippers.
“During periods of high demand for housing, resales tend to increase and prices rise,” said Rick Sharga of Atom Data Solutions.
Mr. Shalga said 10% of homes sold in the first quarter of this year were resold. In Phoenix, one of the cities with the fastest home price growth, the figure was almost 20%.
However, this data doesn't necessarily tell us where the market is headed – rather, it tells us where it has been.
“The properties that will be resold in the next few quarters are homes that were purchased three, six, nine months ago,” Shalga said.
Because of the time lag between buying and selling, it's unclear how many of today's buyers plan to resell, but Sharga expects resales to decline due to low profit margins. Yields are the lowest they've been in more than a decade as rising interest rates impact buyers' willingness to spend. Plus, the cost of getting all the work done is rising.
“Investors are seeing higher prices for the materials they were using to renovate their homes and possibly higher labor costs as well,” said Daniel Hale, an economist at Realtor.com.
Fewer flippers could mean more listings for people looking for their first home, said Daniel McMillen, dean of the real estate department at the University of Illinois at Chicago.
But there are still some drawbacks for first-time owners.
“First-time homebuyers are generally much more vulnerable to rising interest rates,” McMillen said.
Currently, the average interest rate on a 30-year fixed mortgage is 5.9%, nearly double what it was six months ago.
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