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December 2013

Home Prices Rebounding,

Bargains Elusive

By NWREporter

December 2013

"Home prices have come back strong," according to veteran real estate consultant John Burns, CEO of a California firm that bears his name.

Burns illustrated his optimism in a recent blog that compared price-to-income ratios for 21 housing markets his company tracks. In 20 of those markets, including Seattle, the ratio of median home price to median household income now exceeds historical averages.

For Seattle, John Burns Real Estate Consulting found a current average of 5.8, up from the historical average of 4.1. San Francisco, at 11.1, had the highest ratio. Its historical average, using data since 1981, is 7.4.

In the U.S., the current price-to-income ratio is 3.7, up from the historical average of 3.1. Among the 21 markets in the survey, only Atlanta's ratio of 2.0 dipped below its historical average of 2.1.

Burns noted mortgage rates remain near historical lows and said his firm remains optimistic on the future of home prices and housing construction, but acknowledged housing bargains are hard to find. He tempered his optimism by acknowledging it is founded more on "assumed low mortgage rates, solid economic growth, and low new home supply than it is on household income growth and solid demographics."

John Burns Real Estate Consulting conducts housing market research, analysis and consulting for builders, developers, banks, lenders, investors and building product manufactures.