Nationwide the average price of existing homes was 9.5% higher this August than it was the same month of last year.
At the same time new home prices have increased 17% as well. Some economists feel that the marked decrease in foreclosures is one of the reasons for increasing home prices.
Paul Diggle, a housing economist at Capital Economics says “Deeply discounted existing homes have been subject to strong demand from cash buyers and investors looking to lock into housing’s attractive income returns. The supply of such homes, meanwhile, has been dwindling. That has bid up existing house prices, particularly at the lower end of the price spectrum.”
For obvious reasons properties in distress tend to sell for much less than their market value and markets with a large number of distressed homes also tend to have the largest price falls. Although short sales of properties in Miami are on the increase, nationwide new foreclosure filings are lower than they have been in the last five years. According to Daren Blomquist of RealtyTrac “There is a shortage of inventory — as crazy as it sounds to say that. In a lot of market there’s less inventory of foreclosed properties than there is demand. You’re hearing about multiple bids for these properties.”