The implications of unevenness in rapid housing value appreciation

A new analysis suggests housing prices did not increase as much in recent years in some wealthier areas:

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House prices were up less than 1% last quarter from a year earlier in Westchester, New York, for example — and not much more than that in Montgomery County, Maryland, a favorite of wealthy commuters to the capital.

The trend isn’t limited to the east coast, with Chicago’s Cook County posting an increase of 2%. By comparison, almost two-thirds of the counties surveyed saw prices rise more than 10%…

“Demand today tends to be stronger at the entry and mid-priced tiers of the market than at the higher end,” said Rick Sharga, Attom’s executive vice president of market intelligence. “Price appreciation tends to rise more quickly in counties with a higher percentage of lower-priced homes available.”…

In more than three-quarters of the 586 counties analyzed by Attom, housing was less affordable than in the past relative to incomes.

Interpreting this report about the data and trends, it sounds like housing prices increased faster than incomes in many places but not all places. Additionally, housing did not appreciate at the same rate; places with more cheaper housing appreciated more.

Two quick thoughts in response:

  1. There is a need to both see housing as a national issue and a need to understand local variation in housing. While so much about housing can be local, there is also a tendency to make sweeping claims about housing across the country as a whole. Better addressing both levels of analysis requires better reporting of data and different kinds of analysis. (And this is why national housing policy is so difficult.)
  2. There is an idea that people who need cheaper housing can move to places or markets with cheaper housing. What if enough people move to those cheaper housing areas so that there is no longer cheaper housing? I’m thinking of the rapid housing value increases in Austin. In the first place, not everyone can simply move to take advantage of that cheaper housing, but, even if they did, this would defeat the purposes of moving as housing prices would increase.

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