Real estate prices are not only a key indicator of the health of the American economy, they’re also the gatekeepers to a key piece of the American dream: Owning our own homes.
Interestingly, real estate prices vary greatly across the nation. This infographic offers a snapshot of the price-per-square-foot cost of real estate in major metro areas across the United States, as well as a glimpse into the affordability of real estate based on each area’s median family income.
HomeAdvisor’s Chief Economist Brad Hunter on Real Estate Prices in America:
Following a 27 percent increase in home prices over the past five years, home affordability has again become a hot topic. Housing prices are locally dependent, and some metro areas have a more severe affordability problem than others. While national home prices have risen 27 percent over the past five years, home prices in the Mountain region have seen a 44 percent increase and the Pacific coast has seen a 48 percent increase*.
Why have home prices risen so much faster than household incomes? As usual, it’s all about supply and demand. Supply is constrained on two different levels:
- The supply of new homes (homebuilding) is constrained as a result of the worsening lot shortage (i.e., the shortage of well-located lots on which to build).
- The number of homes listed for sale is constrained, partly as a result of the number of homeowners underwater on their mortgages (though this situation has improved as home prices have risen).
*Source: HPI Report from FHFA; HomeAdvisor
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