“Why are house prices so high?” was the question posed in last month’s KSL.com headline; “Blame remote work, not ‘speculative bubble,’ Fed study says.” That appraisal bolstered the contention that rises in West Palm Beach home prices are due to fundamental factors rather than rampant speculation. The Federal Reserve Bank of San Francisco made the case in their research finding, “Remote Work and Housing Demand.”
West Palm Beach House Prices Reflect Lifestyle Shift
The Fed paper’s authors were tasked with the job of tracing the origins of the recent national surge in housing prices. Their finding should be comforting for local homeowners who might worry over the national deceleration in housing price increases—especially given the decline in the volume of sales.
The key to the price surge lay in a cultural change triggered by the pandemic—a reshaping of the way Americans work. Statistical analysis proves that “The shift to remote work accounts for more than half of overall price growth over the pandemic.” Between November 2019 and November 2021, house prices grew by 24%.
As for what Fed Chairman Jerome Powell sees for what lies ahead, he makes some positive points about “the deceleration in housing prices we’re seeing.” In addition to the fact that U.S. prices in most areas remain higher than they were a year ago, he points to one basic factor that’s hard to naysay: the continuing imbalance between supply and demand. He sees the deceleration in housing prices “should help bring…prices more closely in line with rents and other housing fundamentals.”
If that link holds up, it could be another argument for stability in the market. According to creditkarma.com, in 2022, “the average rent increase in the U.S. was 14%.” That figure put it in lockstep with new home sales price gains—last Wednesday, Reuters reported that September’s median new house prices showed an annual gain of 13.9%.
Americas Mortgage Solutions Your Trusted Mortgage Expert
West Palm Beach home prices are dependent on a raft of factors. If you are considering how your own property would fare in today’s market, the best way to proceed is to get an up-to-the-moment report on the latest comparable sales. Give me a call at (561) 316-6800: I’ll be happy to provide just that!
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