When I look at the areas that are seeing rising home prices they share common characteristics. They are areas that appeal to the top 10% or 15% in income and they are all close to economic centers.

A little further from major economic centers I see prices staying pretty much stable despite a lack of inventory and efforts to prop up prices by the powers that be.

And I see new homes being built, because builders and those that lend to them see a profit to be made. This will lead to increased inventory and if it is the right kind of inventory for that particular market prices will stabilize or fall. That’s a pretty big if, Ryder homes is building in Sebastopol, it’s at the wrong price point and it’s the wrong style of home.

When, not if, someone builds a small development of single level bungalows here priced in the low to mid $600k level it’s going to have a large effect on prices. Real Estate is priced at the margin, when inventory picks up and one or two homes sell for a little less…

This time it IS different , it’s not a rising tide lifting all boats, the top 1% or 2% is doing better than it ever has, the top 5% is doing really well and the top 15%  is doing OK and looking for safety. And Real Estate looks a lot safer than Treasuries or the Stock Market to a lot of people. And you can leverage your Real Estate purchase with free money, 3.5% is less than inflation.

Builders will build whenever they can get the money to do so, I simply do not understand why they don’t build homes suitable for an aging populace. I could sell well built single level homes built for the elderly and handicapped all day long and they would sell for at least a 5% premium, nothing to sneeze at when you look at the bottom line. And while retrofitting a home is an expensive PITA, building a home with wider doorways and the rest doesn’t cost much more.