The latest data from Redfin heralds a new average home price record in the US. Now at $394,000, the average home in America, is now more expensive than ever.
What’s driving up house prices? Where are things headed from here? What’s the best play as a real estate investor?
Housing Costs Are At Record Breaking Highs
Redfin reports that the average house price in June 2024 hit $394k. Up another 4.4% from last year. A new record, but a very moderate, if not below average rate of growth.
It’s not just the price tag of homes that is keeping housing costs high either. At around 7%, high interest rates mean the average payment on a 30 year mortgage loan is now $2,829. Just $30 less than the record high in April 2024.
Then there are substantial jumps in the costs of utilities, insurances, and maintenance and repair costs. As well as just general living costs.
This is also simultaneously creating more financial distress, and more motivated sellers.
Why Are House Prices Up So Much?
General inflation has been pushing up house prices more than anything else.
As living costs grow, so do material and labor costs for everything involved in building, renovating, and buying homes.
This is in addition to high ongoing demand for real estate investments from individuals and institutional investors alike.
Many media commentators blame high prices on a lack of publicly marketed housing inventory. This is a dynamic which may be easing up. Though which is very much localized, and different by price range.
Well positioned sellers who have locked in low fixed rate mortgages just find it unappealing to sell up and move at today’s high costs.
When you look at the actual number of vacant housing units across America, we’ve typically seen millions. So many that every homeless person could have several.
Investing Strategy
Experienced investors are not all confident that this trend in rising prices will last forever. They are finding more and more motivated sellers and distressed deals already.
This is creating a sweet spot for wholesaling houses. Buying low, and selling at peak prices.
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