2013 has been a rollarcoast in home prices and setting breaking levels in certain areas. Many buyers are asking if this new trend is a bubble and will it end? Let's take a look.
Since June of last year, home prices have rose by 11.9%. On a seasonally basis (real estate has seasons) there was a 0.6% from May (spring) to June (summer).
According to Wall Street Journal's Nick Timiraos, prices will still rise but not as fast as this previous year. This could mean that the 'bubble' everyone was asking about...isn't a bubble that will burst.
WHY????
Economists from Goldman Sachs Group offered three reasons why home price gains will be moderate:
1) Housing is no longer that cheap. Prices in relations to incomes and that relation to rents - home prices are no longer "undervalued" as they did two years ago. Recent home prices gains have put home prices on a national basis back at "fair value."
2) Sharp spike in mortgage rates led buyers to pause. With the low historical interest rates created an urgency to jump into the market. Since the 1% increase in June, buyers are stepping back and re-considering their options.
3) Biggest drivers of price gains are going to play a smaller role going forward. Home price have increased in part of the decline in foreclosure and distressed homes. Investors are slowing down their purchase because the bargains of last year has dried up.
So.... unit there is new construction which is gearing up to open by next year (go to NewHomeSource for upcoming development communities) - it looks like this upward trend will continue into 2014.
Source: The Wall Street Journal
Since June of last year, home prices have rose by 11.9%. On a seasonally basis (real estate has seasons) there was a 0.6% from May (spring) to June (summer).
According to Wall Street Journal's Nick Timiraos, prices will still rise but not as fast as this previous year. This could mean that the 'bubble' everyone was asking about...isn't a bubble that will burst.
WHY????
Economists from Goldman Sachs Group offered three reasons why home price gains will be moderate:
1) Housing is no longer that cheap. Prices in relations to incomes and that relation to rents - home prices are no longer "undervalued" as they did two years ago. Recent home prices gains have put home prices on a national basis back at "fair value."
2) Sharp spike in mortgage rates led buyers to pause. With the low historical interest rates created an urgency to jump into the market. Since the 1% increase in June, buyers are stepping back and re-considering their options.
3) Biggest drivers of price gains are going to play a smaller role going forward. Home price have increased in part of the decline in foreclosure and distressed homes. Investors are slowing down their purchase because the bargains of last year has dried up.
So.... unit there is new construction which is gearing up to open by next year (go to NewHomeSource for upcoming development communities) - it looks like this upward trend will continue into 2014.
Source: The Wall Street Journal
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