Home prices, what to know
The housing market’s post bubble home prices line stays almost untouched so far, but for how long?
In the past year we have seen in the Media the home prices roller coaster, costs in 10 states, including Florida, hitting record highs, and not long ago the real estate industry was facing a hard time. So, how can we manage to keep up with the home prices ups and downs?
First we have to understand how the market corrects itself.
Of course we are watching regulations of the prices so the buyer can obtain the amount of money, but many consider this a short term strategy to control the bubble of home prices, instead of a well planned, long term, strategy to have a healthy Market in the future.
We are watching a general improvement, but for owners and future sellers, there is sort of a bitter taste inside the sweet, the rhythm at which home prices are rising, is beginning to slow down. Also, an important element is driving future’s growth; Low mortgage rates tend to increase home prices, making it easier for buyers to borrow more. In the other hand, even a little rise in rates, can multiply the amount of money to pay at the end of the month.
of course, the average home owner that felt save with the equity that had been accumulated, but, is not pleasant seeing an important amount of equity disappear, having said that, nobody’s home prices reduces value on its own, also, as around 95% of sellers buy at the same time, it is the affordability and the value among several deals that should be the definer focus.
Home prices are sustained by a fragile balance between how much the buyer can borrow, excess or shortages of inventory, high or low mortgage rates, affordability and many other factors that with little changes, can disturb the balance in a terrible way, if this does not have strict regulations in the future, we could be facing a second 2007 real estate crisis.
A potential issue: much of the recent rise in home prices was the outcome of purchasers trying to act before it climbs even further.
But there is a light inside of the darkness, we may be experiencing higher price but that does not mean that what is happening is driving the home prices to a bubble.
While the last home prices bubble, we experienced both pricing and sales increase to higher levels boosted by a quick expansion in mortgage financing; now, we are experiencing average sales and average mortgage origination.
As a consequence, there is an almost unnoticeable vacancies rise, and not at all like they did at the end of the bubble. In 2007, vacancies started to increase before sales and pricing found their higher peak as a consequence of flipping and speculative activities in the housing market, and then everything cracked down, On the other hand , currently, vacancies have slowed down to more average levels.
So, current rising home prices are mainly to be expected, as the general economical system improves and rises and first-time home buyers, gradually coming back to the market, also it is possible that, eventually, those higher prices should aim a larger number of home owners to list their properties and builders to boost construction of new properties, which may help to solve the supply problem.
Anyways, if it is a bubble or it is not a great advice to take is to expect the best and prepare for the worst, for that we can feed with all the information out there, and opinions of the experts to develop a Plan B.
David M. Blitzer said in a statement: “Over the next two years or so, the rate of home prices rising is more likely to slow than to speed up. Prices are rising about twice as fast as inflation or wages.”
that why an alternative need to be provided, so the market stays healthy, one of this can be the First time buyers, they are the demand and liquidity that today’s owners are needing on their deals. Without boosting first timers, there is lesser real estate market movement, fewer homes being listed, and a larger concern about supply.
This means a feasible alternative to use, apply and execute in to the housing market, so the prices stay reliably healthy, also, avoiding the feared bubble.
What do you think? Is this the best alternative to be taken? Have you figured other perhaps better alternative? Do you trust the home prices are going to stay in the same line? Let us know in the comments your opinion about the article, find more interesting information in our social networks