Housing market boom really hits home for YVEC
The U.S. housing market continues to operate like a blast furnace with home prices rising more than they have in 30 years. The S&P CoreLogic Case-Shiller Index of property values nationwide surged 18.6% in June as compared to June of last year. That followed a 16.8% gain in May, marking the 13th straight monthly price acceleration since June 2020. That 18.6% increase in June was the largest in housing data going all the way back to 1988. Buyers are armed with big down payments and cheap mortgages which brings competition to a market with a tight supply of homes, fueling bidding wars across the country.
Here at home, Billings has been pegged by the Wall Street Journal as one of, if not the top, real estate market in the United States. The current market is very reminiscent of 2008, although back then prospective buyers were more heavily leveraged than today's consumers, who are much more cash-laden. The extraordinary part of the market change is not just the price gains, it's their consistency across the entire country.
In looking at a broad measure of prices across 20 U.S. cities, increases beat market estimates and climbed 19 .1 % in those cities in June. Price appreciation has been greatest in the West where supply is more highly constricted, and demand remains robust. Among the 20 cities surveyed, Phoenix led the way with a 29.3% gain, followed by San Diego at 27.1 % and Seattle at 25%. The key drivers of these higher home prices are the persistent lack of housing supply coupled with elevated building costs. The unfortunate part of it all is that unrelenting price increases are making it hard for buyers to find properties they can afford.
I don't expect the housing demand, especially in our little comer of the country, to diminish anytime soon. Mortgage rates are expected to remain low, and homebuilders have ramped up construction activity. Lumber prices have come down a bit and other housing drivers continue to move in the right direction, which will support a sustained growth period. Additionally, solid wage growth will help bolster the finances of potential home buyers and better enable them to save for a down payment. At Yellowstone Valley Electric Cooperative through August, we are 40% ahead of last year's record pace of installing new services and we fully expect that trend to intensify through this year and well into 2022, supported by limited supply and strong demand. As this occurs, we have prepared well to handle the growth and we continue to make improvements to our plant, equipment, and employment numbers in order to continue providing excellent service in the wake of robust growth.
Brandon J. Wittman
CEO / General Manager