Everyone loves it when home prices go up, right? Higher asking prices mean that homeowners will get more out of their existing homes, which makes them more likely to sell and upgrade to a larger home. Larger home means larger mortgages. And that’s a win-win for everyone in this business, right?
But exploding home prices aren’t necessarily a good thing. “Extreme price increases create unrealistic expectations, encourage flipping, and might discourage some owners from selling if they expect big increases to continue,” said Trulia’s chief economist Jed Kolko.
However, here’s the good news. The asking prices for homes are still increasing, but prices are beginning to stabilize. According to Trulia’s Price Monitor report for May, none of the 100 largest metros had a year-over-year price gain of more than 20%. That’s the first time that’s happened since July 2012.
Kolko said that’s a very good thing.
“Today, with no markets seeing price gains of more than 20% and only four markets seeing price declines, home price changes are looking more balanced, sustainable and widespread than at any point since the price recovery began,” Kolko said.
The four markets where asking prices are on the decline are El Paso, Texas; Hartford, Connecticut; Albany, New York; and Little Rock, Arkansas.