Rebounding markets such as Las Vegas, Sacramento, Calif., Riverside-San Bernardino, Calif., and Warren-Troy-Farmington Hills/Detroit, Mich., are seeing asking prices soar more than 20 percent. Yet construction activity is less than half its normal level in those places, a new report by Trulia shows.
Investors and builders have bet on different housing markets in the recovery, says Jed Kolko, Trulia’s chief economist. Investors have mostly focused on snatching up properties in markets that saw home prices fall by some of the largest numbers during the housing crisis, whereas builders have bet on markets that avoided the worst of the housing crisis and where job growth has remained strong, like in Texas.
The report follows on the heels of another report out this week by the National Association of Home Builders that shows builders facing a shortage of buildable lots in some of the most booming markets. The shortage of lots is leading to a rapid rise in prices for the limited supply of lots that are available. The average price of a finished lot ready for building was up 40 percent in the second quarter compared to a year ago. Those rising costs ultimately are expected to be passed along to buyers of new-homes.