|With home prices expected to appreciate by over 5% this year, some are beginning to worry about a new housing bubble forming. Warren Buffet addressed this issue last week in an article by Fortune Magazine. He simply explained:
Later, when questioned whether real estate and/or mortgaging could present the same challenges for the economy as they did in 2008, Buffet said:
What factors are driving home prices up?
It is easily explained by the theory of supply and demand. There is a lack of housing inventory for sale while demand for that inventory is very strong. According to a recent survey of agents by the National Association of Realtors (NAR), buyer traffic was seen as either “strong” or “very strong” in 44 of the 50 states (the exceptions being: Alaska, Wyoming, North Dakota, West Virginia, Connecticut and Delaware).
Also, in NAR’s latest Pending Home Sales Report, it was revealed that the index was the highest it has been in a year.
What does the future bring?
As prices rise, more families will have increased equity in their homes which will enable them to put their home on the market. As more listings come to market, price increases should slow to more normal levels.
Anand Nallathambi, President & CEO of CoreLogic, recently addressed the issue:
|The Gallup organization recently released a survey in which Americans were asked to rank what they considered to be the “best long term investment.” Real estate ranked number one, with 35% of those surveyed saying it was a better long term investment than stocks & mutual funds, gold, savings accounts or bonds.
Here is the breakdown:
The survey revealed that real estate was the number one choice among each of the following groups:
Even stock investors ranked real estate number one. According to the report:
The National Association of Realtors (NAR) recently released their latest Existing Home Sales Report, which revealed that homes were on the market for an average of 47 days in March. This is a decrease from the 59 days reported in February, as well as the 52 days reported back in March 2015.
42% of homes across the country were on the market for less than a month, which is the highest it’s been since July 2015 (43%)!
Among the states with homes selling in 30 days or less are Washington, Oregon, and Minnesota. The map below was created using results from NAR’s Monthly Realtor Confidence Survey.
Buyer demand is increasing as the inventory of homes available for sale remains low. If you are thinking about listing your home for sale this year, let’s meet up so I can help you take advantage of current market conditions!
The price of any item is determined by the supply of that item, and the market demand. The National Association of Realtors (NAR) recently released their latest Existing Home Sales Report which gives insight into today’s market conditions.
Inventory Levels & Demand
Sales of existing homes rose 5.1% month-over-month in March and are 1.5% higher than this time last year. Sales rose in all four major regions in March.
Total unsold housing inventory is 1.5% lower than March 2015 at a 4.5-month supply and remains well below the six months that is needed for a historically normal market.
Consumer confidence is at the highest level in over a decade. Pair that with interest rates still below 4%, programs available for down payments as low as 3%, and you have an attractive market for buyers.
Homes sold in March were on the market for an average of 47 days and 42% of properties sold in less than a month.
March marked the 49th consecutive month of year-over-year price gains as the median price of existing homes sold rose to $210,700 (up 5.7% from 2015).
So What Does This Mean?
The chart below shows the impact that inventory levels have on home prices.
NAR’s Chief Economist, Lawrence Yun gave some insight into the correlation:
If you are debating putting your home on the market in 2016, now may be the time. The number of buyers ready and willing to make a purchase is at the highest level in years. Let’s meet up so we can get the process started.
|Home values continue to climb and are projected to increase by about 5% over the next twelve months. That is great news for anyone who owns a home. However, it could present a challenge for a family trying to sell their house.
If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the sales price when performing the appraisal for the bank.
The National Association of Realtors (NAR) recently released information revealing just how prominent the challenge is in today’s market.
And the challenge is deepening…
Every month, Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraiser’s evaluation in their Home Price Perception Index (HPPI). Here is a chart showing that difference for each of the last 12 months.
As we can see the difference has increased each of the last two months.
Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let’s meet up so I can guide you through this, and any other obstacle that may arise.
|In a study conducted by Builder.com, researchers determined that nationwide, it would take “nearly eight years” for a first-time buyer to save enough for a down payment on their dream home. Depending on where you live, median rents, incomes and home prices all vary. By determining the percentage of income a renter spends on housing in each state, and the amount needed for a 10% down payment, they were able to establish how long (in years) it would take for an average resident to save. According to the study, residents in South Dakota are able to save for a down payment the quickest in just under 3.5 years. Below is a map created using the data for each state:
What if you only needed to save 3%?
What if you were able to take advantage of one of the Freddie Mac or Fannie Mae 3% down programs? Suddenly saving for a down payment no longer takes 5 or 10 years, but becomes attainable in under two years in many states as shown in the map below.
Whether you have just started to save for a down payment, or have been for years, you may be closer to your dream home than you think! Meet with a local real estate professional who can help you evaluate your ability to buy today.