US home prices are up for the eighth month in a row according to the S&P Case Shiller Index.
Just how expensive are homes in the US now? What trends are driving housing prices up even further?
How Expensive Are Homes In The US?
There are a variety of estimates of just how costly homes are right now, and how fast prices are going up.
According to Forbes, and data from the US Census Bureau and HUD, the average home price in the second quarter of 2023 was over $495,000.
Other methods of calculation put that number closer to $415k to $431k. This is up by around $100,000 over the past three years.
In any case, homebuyers using any mortgage financing can easily expect to pay over half a million dollars for a home once they factor in interest and lender costs.
Other recent data shows that the average US household can expect to pay over $200k in rent over their lifetimes.
Of course, all real estate is local. The average home price in some zip codes is well over $1M, but some states are still under $300k.
4 Trends Driving Real Estate Transactions
1. The Hunt For Affordability
The middle class has been crushed over the past few years. Yet, even worse is coming for them in the months ahead. Downsizing is an urgent priority for many. Others are moving wherever they must to find access to affordable rentals.
Migration between states has been massive over the past couple of years. It also has a domino effect. Once inexpensive areas are becoming new magnets for the uber wealthy and their businesses. Which in turn is driving locals farther away, and into other states to find somewhere they want and can afford to live.
3. Wealth Preservation
The wealthy continue to direct their capital into real estate assets. They understand the risks and frailty of other asset classes in the current environment, and crave keeping what they’ve made safe in tangible, hard assets.
4. Investment Income
Everyone from the former middle class to the affluent need more income today. They need more streams of income, more income, and passive income, like never before. Investing in income producing real estate is the ideal solution. Especially given its other perks and benefits. Including downside protection and potential tax breaks.