According to CNBC, owners of cheap homes are in luck. Right now, the prices of homes are rising, and the lower priced houses are rising twice as fast as those priced higher. During the recent recession, new home construction waned, but now the housing market has bounced back. The past two months have been good for builders, as business has increased.
Currently, there is a housing shortage in the U.S., especially for cheaper homes, which is why those prices are rising. There is a high demand for these houses, but a low supply.
In the past year, the prices of homes have increased by six percent. According to a survey by Zillow, home price appreciation is much higher on low end homes than on high end homes in the major cities across the U.S. Detroit shows the biggest appreciation gap, with homes rising 20 percent on the low end and only 5 percent on the high end.
During the recession that started in 2012, the cheaper houses went into foreclosure and bought by investors. Many of these investors turned these houses into rental homes. Most likely, the investors will hold on to their rental properties for now.
Due to the rapid rise of the prices of single family homes, millennials will most likely choose to rent these homes instead of buying them. Most of these homes are found in safe neighborhoods, making them desireable to millennials wanting to start families. At the present moment, it will be easier for young people to rent these homes rather than save for a downpayment and try to buy them. Most likely, the price of these homes will continue to rise over the next year, making them unaffordable. For those who currently own a lower priced home, now would be a good time to sell or rent it out.