HOME VALUES,EQUITY & EXCITEMENT ARE UP!
RISING PRICES AND EQUITY AT THE RIGHT TIME OF YEAR
The holiday season is right around the corner, and the housing market could not provide homeowners with better news!
Over the past year, the housing market improved by leaps and bounds. Several factors, such as fewer distressed properties, low inventory, and high demand, converged to drive up home prices and give equity back to homeowners who haven’t had equity since the housing bubble burst.
If you found yourself struggling in recent years, or just waiting to sell until the housing market turned around, it’s important to know that the time is now! Let’s take a closer look at how the market has improved and why the turnaround in the market affects you, too!
1)THE HOUSING MARKET IS REBOUNDING
When the housing bubble burst between 2007 and 2008, home values plummeted. Almost overnight, homeowners nationwide saw the equity they built in their homes vanish.
For many, the situation worsened as recession gripped the United States in the wake of the bubble burst.
As the recession deepened, more and more families struggled financially. Hit hard by unemployment and a worsening economic landscape, many found themselves unable to afford their mortgages. Facing the threat of foreclosure, many were forced to try and sell their homes. However, because home prices had fallen so precipitously, many found that they owed more on the home then the home was worth.
These homeowners, called “distressed homeowners,” numbered in the millions. In the years following the housing crisis, the sheer volume of distressed properties weighed heavily on housing prices, keeping all home prices low. However, over the past couple years, the housing market has begun to rebound.
2) FOR MANY HOMEOWNERS, FORTUNES HAVE CHANGED
More recently the number of distressed properties has fallen to levels not seen since before the housing crisis, and the reduced number of distressed properties is positively affecting home values.
First, both the economy and the housing market are improving. As homeowners’ financial situations improve, far fewer find themselves facing the threat of foreclosure. Additionally, fewer homeowners are forced to sell at bottomed out prices, as they are in a better position to wait until they recover value in their homes.
Second, as things started to look up, investors flocked to the housing market. Both small investors and large-scale investment firms bought huge quantities of foreclosed upon and distressed properties, taking them off the market in bulk. Without the millions of distressed properties keeping prices low, home prices have skyrocketed over the last couple years.
3) SKYROCKETING HOME PRICES
As mentioned previously, with fewer distressed properties on the market, home prices have been able to recover significantly.
In fact, April 2014 marked the 26th month of consecutive home price gains, with a gain of 10.5% over April 2013. (Shockingly, a double-digit gain of 10.5% was the lowest gain 14 months!)1 To see just how sharply home prices have increased, refer to the following graph.
The graph shows the percent change in home prices year-to-year since 1988. If you look at the last couple years, you can see just how sharply prices have increased!
4) THE DEVELOPMENT OF THE SELLER’S MARKET
While the reduced number of distressed properties allowed home prices to begin to recover, many
factors fueled the skyrocketing prices. Chief among those factors is the development of a seller’s market.
As the United States economy improved and home prices recovered, more people were in a position to
buy a home.
When the housing crisis hit, many homeowners who wanted to sell were forced to wait until
the market recovered. For many, that time is now. In fact last year, more than three million homeowners
regained equity, according to the National Association of REALTORS3. Additionally, unemployment
decreased and more Americans started to enter the housing market. At the same time, home
affordability remained low. The result was a sharp uptick in demand.
However, there have not been enough properties to meet the increased demand. During the housing
crisis, new home construction came to a stand still. Consequently, there are not enough new homes on
the market today. Additionally, many homeowners are still waiting to sell their home. Some are waiting for
home prices to rise even more, while others are waiting for more homes to choose from. The result is
even less inventory on the market.
This imbalance in supply and demand has contributed significantly to the rising home prices in recent
IF YOU’RE THINKING OF SELLING YOUR HOME, ACT NOW!
The current market conditions provide a “perfect storm” for those looking to sell their homes. Because
inventory has remained so constrained, homeowners are able to get more for their homes than they
realize, as buyers enter bidding wars over the properties that are available. In April, the median time on
market for all homes was just 48 days!
In this crazy market, people are even making offers on homes not on the market!
These market conditions won’t last forever, though! More homes are expected to enter the market,
balancing supply and demand. Consequently, home prices are expected to grow much more slowly next
As a real estate agent in today’s market, I make it my business to have the most up-to-date information
and can help you understand exactly what your current situation is. If you have been underwater, it is entirely
possible you are not anymore. If you have been holding off until the market started to recover, that
time is now.
Contact me today for a free valuation of your home
and let me help you determine your best option!