I am asked every day where I think that home prices are headed. The short answer is “up”. Over the last 40 years, home prices have continued to appreciate at an average of 4.02% in the state of Utah. We are already beating the expected 2.89% appreciation rate this year, which will burst the expected 18.15% five-year gain wide open. The rising cost of homes is due in part to the declining number of homes available for sale. Even with the abundant number of new homes being constructed, inventory is down 16% from this time last year. That whole supply and demand thing is proven true time and time again.
In 1961, Mark Rothko painted “Orange, Red, Yellow”, pictured here. In 2012 this piece rocked the art world by selling for over $86.9 million, which was a was a record for a post-war painting. Unfortunately, Mr. Rothko was long gone by the time the gavel dropped at the Christie’s auction–there aren’t too many dudes that live to 109 these days. As there was only one of Orange, Red, Yellow, that limited supply drove the price of the piece up over the years to a value unattainable by most people. Fortunately for you and me, home prices are a little less crazy–and a little easier to understand.