Homes in some of the largest U.S. cities just keep getting more expensive.
In Phoenix alone, an index that measures home prices climbed a whopping 29.3% in June from the previous year, as more people move to the city. The measure in San Diego rose 27.1%, while Seattle increased 25%. The index in nine cities jumped 20% or more.
Overall, in the 20 cities measured by the S&P CoreLogic Case-Shiller data, the index rose 18.6% in June from a year earlier. That’s the largest surge since 1988.
Prospective buyers nationwide are grappling with a slate of forces that have pushed up costs in real estate since the pandemic began, including cheap mortgages, a limited supply of houses and soaring demand for suburban escapes.
“We are in this terrible situation where supply is down, demand is up and guess what, you can’t just push a button and get more houses,” said Mike Bailey, director of research at FBB Capital Partners. “I would expect the spike in home prices to last for some time as demand eventually normalizes post-Covid and as new supply gradually comes online.”
Seattle is attractive to people who want to be close to nature, said Doron Weisbarth, broker and owner of Seattle-based Weisbarth & Associates realty company.
“It’s one of the few cities that had people coming in during the pandemic,” he said. “If you’re into outdoors, everything is at your fingertips.”
In Phoenix, prices are being driven up in part by the workers who can do jobs remotely and pick a lower-cost city to make their home base, said George Hammond, director of the Economic and Business Research Center at the University of Arizona’s Eller College of Management. “Arizona is an attractive place for migrants given the climate and cost of living,” he said.
There are signs that prospective buyers are getting discouraged and waiting to make their purchases. Pending home sales tracked by the National Association of Realtors decreased in July for the second month in a row.