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
years.
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
year.
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!
Comments
Post a Comment