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As home prices reach a sustainable pace, a demographic shift in demand is moving toward city centers, according to Fitch Rating's second quarter 2015 U.S. RMBS Sustainable Home Price Report. After decades of suburban and exurban growth, Fitch reports that a large portion of housing demand is making its way back to central parts of cities.
According to Fitch, home prices have grown 50 percent faster in urban centers than in the larger metro statistical areas since 2000. City centers are expected to continue to experience growth due to the shift in demand, even in regions lacking significant fundamental support, and are currently considered overvalued. Following several years of significant growth, home prices have finally began to settle into to a consistent and sustainable period, growing only 2.8 percent year-over-year, compared with 8 percent in the year prior.
Many Americans are gearing up to purchase a home in the coming years. According to BMO Harris Bank 2015 Homebuyers Report, 52 percent of Americans say they are likely to buy a home in the next five years. Additionally, those surveyed indicated that they are willing to pay an average of $296,000 for a home and will average a 21 percent down payment.
