Home prices in Seoul rose by 22% last year, the biggest increase in any major city in Asia

Seoul South korea
Home prices in Seoul increased by 22%.

  • The average home price in Seoul, South Korea, rose by 22% year over year in 2020.
  • That’s the biggest price increase of any major city in Asia, per a new report from Knight Frank.
  • Home prices in New Zealand, Turkey, and Russia also saw major increases.
  • See more stories on Insider’s business page.

Home prices in Seoul are taking off.

The South Korean city saw a 22% increase in home prices from Q4 2019 through Q4 2020, according to a new report from global wealth consultancy Knight Frank.

It’s the biggest price increase among all major cities in Asia, and it far eclipses the next-highest price change amongst cities in the region. No other Asian city tracked a greater than 10% increase in the same time period.

Seoul, a city of around 9.9 million, is trying to position itself as an alternative to Asia’s financial hubs, and many locals are finding themselves priced out of the real estate market.

The city has faced an increasingly dire affordability crisis since President Moon Jae-in took office in 2017. Despite the government announcing nearly two dozen measures to curb increases over the past three years, home prices in Seoul have risen by 50% since 2017, per a Reuters report.

Skyrocketing home prices in cities across New Zealand and Russia

Urban home prices globally increased by an average of 5.6% in 2020, Knight Frank reported. That’s up from 2019, when home prices saw a 3.2% increase.

In a press release, Victoria Garrett, head of residential, Asia-Pacific, for the firm said buyer confidence is expected to grow with vaccine rollout and addressed fears of a housing bubble.

“Governments are now starting to watch residential markets closer to minimise the risk of asset bubbles,” Garrett said.

The three biggest home price changes over the 12-month period were all recorded in Turkey, though the report notes price growth in Turkey is linked to high inflation and changes with the lira. Ankara, Izmir, and Istanbul led the ranking with 30.2%, 29.4%, and 27.9% changes respectively.

New Zealand’s home prices are also taking off, with two major cities – Auckland at a 26.4% increase and Wellington at 18.4% – ranking among the top 10 cities globally. Bloomberg recently reported that the housing market in New Zealand is “brutal,” citing a dilapidated bungalow in an Auckland suburb that sold for NZ$1.81 million and a national median home price that’s 6.7 times higher than the average annual income.

Russian cities, too, made appearances in the report’s top ten rankings with St. Petersburg (25.4% increase) and Moscow (21.2% increase) at No. 5 and No. 7 respectively.

For its global residential cities index, Knight Frank tracks the movement in mainstream residential prices across 150 cities worldwide.

Read the original article on Business Insider

US home prices soared at the fastest rate since 2006 in February

House for sale US
A house’s real estate for sale sign shows the home as being “Under Contract” in Washington, DC, November 19, 2020.

  • US home prices surged 10.4% year-over-year in February, the biggest such jump since 2006.
  • The market has been red hot during the pandemic, but affordability represents a new challenge.
  • Price growth will cool into 2022 as mortgage rates rise and price out more buyers, CoreLogic said.
  • See more stories on Insider’s business page.

Everyone knows it’s been hard to find an affordable house amid the pandemic, but as the data comes in, it’s becoming clearer just how hard.

The answer: Extremely.

US home prices continued to rip higher in February as supply constraints across the country and outsize demand boosted competition.

Selling prices increased 10.4% in February from year-ago levels, marking the largest year-over-year gain since 2006, according to CoreLogic data published Tuesday. Prices rose 1.2% from levels seen in January 2021. Idaho and Montana saw the biggest jumps, with year-over-year gains of 22.6% and 19.5%, respectively, according to the financial analytics firm CoreLogic.

And the outlet sees another year of more expensive housing ahead, projecting prices will rise another 3.2% by February 2022. The end of the pandemic can ease constraints on supply, CoreLogic said. On the demand side, it expects the lack of affordable housing to cut into some potential purchases.

“The run-up in home prices is good news for current homeowners but sobering for prospective buyers,” Frank Nothaft, chief economist at CoreLogic, said. “Those looking to buy need to save for a down payment, closing costs, and cash reserves, all of which are much higher as home prices go up.”

The housing market was among the few hotbeds of economic activity throughout the coronavirus pandemic. The Federal Reserve’s emergency rate cuts in March 2020 pulled mortgage rates to numerous record lows throughout last year, leading many to take advantage of more appealing borrowing costs. Prolonged work-from-home periods spurred moves from apartment-dense cities into suburbs, which also lifted housing-market demand.

The buying spree quickly snapped up most of the market’s available supply, but that streak recently showed signs of slowing. For one, expectations for a strong economic recovery saw investors dump Treasurys in recent weeks, lifting yields on government debt and in turn leading mortgage rates to swing higher. Rates now sit at their highest levels since June after rising for seven weeks straight.

The turnaround in mortgage rates and soaring prices seemed to finally bite into the housing market’s rally in February. Existing home sales fell 6.6% that month to the slowest rate since August, according to the National Association of Realtors. At the same time, supply remained a measly 1.03 million units, a level that would only satisfy two months of sales at the February rate. Should prices trend even higher, the red-hot market could cool even faster.

“Homebuyers are experiencing the most competitive housing market we’ve seen since the Great Recession,” CoreLogic CEO Frank Martell said. “As affordability challenges persist, we may see more potential homebuyers priced out of the market and a possible slowing of price growth on the horizon.”

Read the original article on Business Insider

A $400,000 house got 122 offers in 2 days, highlighting the desperate frenzy buyers are facing amid skyrocketing real-estate prices and a dearth of homes for sale

Suburban neighborhood aerial view
  • A central California home for sale received 122 offers in a single weekend.
  • The selling price was “in the mid-$400,000 range,” according to Fox affiliate KTXL.
  • It’s a symptom of a soaring real estate market where inventory is low and demand is high.
  • See more stories on Insider’s business page.

A California home received 122 offers in a single weekend amid a skyrocketing US real estate market.

The 1,400-square-foot home – located in Citrus Heights, California, a suburb of Sacramento – was listed at $399,900. It spans 1,400 square feet and has three bedrooms, two bathrooms, and a swimming pool, according to a report from KTXL, the local Fox affiliate.

The house received 122 offers in two days, including one above $500,000, and has since been sold for an undisclosed amount – KTXL reports the selling price was “in the mid-$400,000 range.”

The home’s current owners predicted they would receive eight or 10 offers for their home. They’re planning to move to Idaho, KTXL reports.

Read more: It’s actually a horrible time to buy a house

The unprecedented number of offers is a symptom of a pandemic-related surge in home sales. According to a September report from the National Association of Realtors, existing home sales reached a 14-year high last August. Similarly, housing inventory hit a record low in September, and dipped even lower one month later to 2.5 months of supply.

Those who already own homes are opting not to sell, and new home construction has dipped over the years. But according to Bloomberg, new home construction rose to a new high last August, its highest since 2006.

Given the low inventory, home prices are also on the rise. Prices soared through the end of 2020, jumping the most in seven years by December, according to the S&P Case-Shiller US home-price index. Phoenix, Seattle, and San Diego saw price increases among the 19 cities surveyed.

A rush to buy up homes may lead to regret for new homeowners

The real estate frenzy is driven by a combination of factors. Mortgage rates hit record lows a dozen times in 2020 alone, and the pandemic induced a desire for outdoor space or a more comfortable work-from-home arrangement.

According to research from investment management firm Cowen and Company published late last year, there’s been a noticeable migration among people ages 25 to 34 from urban areas to suburban ones. Among the 2,700 people Cowen surveyed, 48% of millennials reported living in the suburbs compared with 44% in 2019.

Those who reported living in cities fell to 35%, down from 38% last year.

“This suburbanization trend has been slowly occurring since 2017, and we expect it to accelerate with the COVID-19 disruption,” Cowen analyst John Kernan wrote. “These results are also corroborated by a shift in home ownership.”

The rush to snap up homes during the pandemic has already led to regrets for many buyers. The Wall Street Journal’s Candace Taylor reported last month that buyers were making hasty purchases, skipping due diligence, and waiving inspections. One family discovered a wasp infestation after closing on the house, while another learning they’d have to spend $150,000 on siding to alleviate a woodpecker issue.

A LendEDU survey from September found that roughly 55% of Americans who bought houses during the pandemic reported buyer’s remorse – 30% of those people said they should have waiting to buy a home for financial reasons.

Scott Trench, the CEO of the real-estate-investing resource BiggerPockets, recently told Insider’s Taylor Borden that it may not make sense to try to buy a house right now.

“Frantically trying to buy ‘something’ is a great way to make a bad purchase,” he said.

Read the original article on Business Insider