An article “As Stocks Swoon, Home Prices Accelerate Upward Again” published in Forbes by Lawrence Yun, chief economist at the National Association of REALTORS, was very interesting. It was very intersting because, Lawrence Yun, himself, predicted that Home prices are to rise between 5 and 6 percent in 2016 last year, which is moderate.


Lawrence Yun notes “the stock market woke up on the wrong side of bed this year, suffering a 10% correction. But home prices, another important asset for many families, look to be reaccelerating. The national median home price increased 7.6% over the past 12 months to December 2015. Other home price data show similar strengthening in their respective measures to either the fastest rise of the year or nearly so: the CoreLogic home price index increased by 6.3% in December while the less timely home price data from the Federal Housing Finance Agency rose 5.9%, and the Case-Shiller index rose by 5.8% to November”

“Why are the prices reaccelerating? It’s a simple case of insufficient supply to meet demand. At the end of December there were 1.79 million homes available for sale, down 3.7% from an already low level one year ago. Moreover, due to the higher-than-normal sales pace in December, when the weather was unseasonably warm, the supply-demand balance measure of months’ supply fell to 3.9 months. In other words, at the current sales pace, the entire inventory would be exhausted in 3.9 months, one of the thinnest levels of inventory recorded in the past 15 years.”

“As things stand at the moment, 2016 will be characterized by shortage and an unpleasant rise in home prices well above people’s wage growth for would be first-time buyers.”


As we discussed in the last blog “How Bad is Housing Inventory?”, there was only 1.9 months of housing supply in January 2016. In other words, at the current sales pace, the entire inventory would be exhausted in 1.9 months! It is a lot worse in San Diego than the national data. It is going to be interesting year for real estate.