As most of us have likely heard or read, the housing market has been heating up for some time now. As the economy continues to improve overall and Federal interest rates creep up, more and more buyers are squeezing into the marketplace and thus driving up prices.
This is great news for current owners of homes that are valued on the lower end of the scale (or what we would call affordable housing) and are able to capitalize on their homes increasing value but not so good news to those either still on the sidelines or who aren’t financially able to get in the game at all. A new article from Zillow Research goes in-depth on this phenomenon and has some great statistical insights that include:
- The country’s most affordable homes have gained 44 percent in equity over the past five years, while the most valuable homes have gained 27 percent.
- Affordable homes in Tampa, Fla., gained 20 percent in value over the past year – the largest gain among the largest U.S. metros.
- Seattle and the Bay Area are the only large markets where the most valuable homes are gaining value faster than affordable homes.
While the surface takeaway may be that affordable homes are gaining equity, which is great for existing home owners — a secondary and more pertinent point in terms of SALT’s work of providing affordable housing is that this demand for entry level homes is straining an already tight inventory of affordable housing and the barrier to entry is steadily increasing.