Have you looked into the housing market lately? After purchasing my first house in 2011, I have been interested in the value of homes in my area, and I’m sure you have an interest in your market as well if you are a home-owner, or would like to become one soon. So what is happening to the value of homes these days?
As I see it, home values are returning to their all-time high (if they haven’t reached that point already), and there are a few reasons for that:
1) Demand is up – There are still people that are interested in purchasing their first-time homes. Recent college grads from 5 years ago really didn’t have this option since they had large student loans and very little work history. Banks were not willing to lend a large amount of money to these individuals like they might have been only a few years prior. Now these 5 year work veterans are starting to consider a house purchase again, which continues to drive up the price of homes across America.
2) Supply is down – According to the Zillow CEO, Spencer Rascoff, 25% of homeowners are still underwater on their mortgage – meaning that if they sold their house today, they would actually still owe money to the bank. Another 10-15% of homeowner are basically net zero on their home and would reap nothing from the sale of their house. This is causing people to hold onto that for-sale sign and not list their house until they get out from under that under water status. With nearly 40% of the homes taken off of the market, the supply of houses is down, which (of course) keep prices up for those that are interested in buying.
3) Interest rates are still low – Interest rates have been hovering at their all-time low for quite some time, and as long as they remain low (with the danger of going up), there will be a higher demand for home purchases.
If you are interested in buying a house, you may have to search for much longer than you expected. I’m sure that you can still find that home you’ve been looking for, but you’re just going to have to flip over a few more rocks to find it.
If you are starting to get nervous about this whole debt-crisis and fragile economy, perhaps it’s time to think about selling your home and finding a cheap rental. With housing prices fighting back to their all-time high, and demand peaking as well, it is a great time to sell your home.
What is your take on the housing market? Have you thought about buying a home? Or possibly selling a home that you own?
Interested in some more reading? Take a look at these articles from this past week:
Asset Allocation Review: How Much Richer Do You Feel In this Bull Market? – by Financial Samurai
Have You Been Naughty or Nice With Your Finances at Girl Meets Debt
How Would Your Life Be If You Didn’t Have Debt at Making Sense of Cents
2013 Modest Money Christmas Cash Giveaway at Modest Money
I Have A Luck Making Machine at Root of Good
Everything You Need To Know About Leaving The Middle Class at Johnny Moneyseed
Debt Payoff Fanaticism versus Investing at Don’t Quit Your Day Job
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.