Prediction of Price Growth Will Slow Down

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

Southern California Homes Are At All Time High

In the month of May, Southern California had it's biggest price gain in nine years which puts sales at a seven-year high! 

Last month, home purchases jumped 19.5 percent from the year before.  The median price paid for all new and resale houses and condos in the six-county region increased by 24.7 percent. 

Due to the low mortgage rates and thin inventory of home for sale, the real estate market is in full recovery. 

Of course, there is speculation of whether we have entered another housing bubble.  Remember that the prices are heating up because of the low inventory and housing is becoming an attractive investment for many home buyers. 

Source: Daily News Los Angeles