“Bargain Home” Prices Keep Going Up


You can rightly say that home bargains are still out there—but not without an asterisk. For local house-hunters who’ve been warned about a shortage of homes for sale, that should come as welcome news—but that does neglect to mention that the meaning of ‘bargain’ has stretched appreciably.

No matter how elastic your definition, “bargain” homes in today’s market are certain to cost significantly more than they would have a couple of years ago (or even just last year). Yet— especially compared with historical norms—landing a home at today’s prices may actually turn out to fit the “bargain” definition—that is, ‘a good deal.’ The evidence is borne out by an indisputable measure: the dollars being laid down in the marketplace. If attractive deals weren’t being struck, the U.S. housing market would be experiencing a downturn. Instead, as The Wall Street Journal characterized it last week, today’s market is ‘red-hot.”

The Journal recently confirmed the latest results: “record-high home prices happening across nearly all markets, big and small.” Even though that’s not the kind of marketplace you’d expect to entice bargain-hunters, the activity is indisputable: by the end of last year, home sales had exceeded the highest levels since 2006. “Red-hot” was no exaggeration—and the figures have extended through this year’s first quarter.

What accounts for such a high level of buyer enthusiasm? Certainly, one major factor is the continuation of rock-bottom mortgage rates. For many, they create bottom lines with readily doable monthly home loan payments. Another factor serves to persuade even more conservative buyers: the confidence consumers have in the sustainability represented by sale prices at today’s levels. Since lenders are maintaining tighter standards, borrowers are more qualified. Per the Journal, that causes economists to believe a mid-2000s-style housing market crash to be less likely.

The surrounding economic environment may also contribute to the relative attractiveness of home offerings. If inflation is on the horizon, many believe real estate represents a solid investment. With Fannie Mae forecasting median existing-home prices to rise 11.5% in 2021, there’s an added incentive to act sooner rather than later—to take advantage of what may turn out to have been a true bargain.