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Housing Bubble Woes

As home sales continue to increase, real estate experts are expressing concern about this sudden surge. The National Association of Realtors® warns that if new homes supply doesn’t increase by 50-percent, the U.S. may be facing yet another housing bubble.

Housing becomes unaffordable when two key market conditions occur: supply simply can’t meet the demand and home prices begin to increase at a faster-than-average rate.

In May, reports showed that the median home price in the U.S. increased by 8-percent over the month before, bringing the national average up to $208,000. While home prices commonly vary from month-to-month, May’s increase is a steady boost over 2012, weighing in at 15-percent higher. This past May actually marked the 15th straight month associated with steady home value gains.

While the last 18 months have seen less foreclosures, only 18-percent of homes sold in April were considered distressed properties. Last year, approximately 25-percent of sales were labeled as distressed, so seeing a reduction in this number is helping to boost the real estate market’s recovery.

While the Association warns that the differences between the crisis’s we face today and the housing bubble burst of 2007 are vastly different, they still believe it’s important to proceed with caution to reduce the risk of a repeat failure. Dramatic overbuilding and less-than-strict loan requirements caused the first housing crisis. Today’s interest rates are still near all-time lows, which is appealing to buyers.

Part of expert’s concerns lies in the fact that homebuyers have increased by 29-percent within the last year, while the available housing supply is down 10-percent. This alone is creating price and concession-fueled bidding wars, making buyers take a backseat to sellers in the purchasing process.

Nationwide, the average time on market for homes is 41 days, which is 30 days less than a year ago. In fact, approximately half of all homes are sold within the first 30 days on the market.

Disagreeing with some economic predictions, “The Wall Street Journal” believes that homebuilders are in an ideal position to benefit from a market comeback. With the last five years experiencing dramatically subdued home construction activity, builders are once again getting back in the game.

Fast-forward to today and it’s more difficult for the average buyer to obtain a home loan. It is even more difficult for real estate investors to qualify for conventional mortgages. My Hard Money Lenders is a direct lender that offers bridge loans, which are perfect for real estate investors looking to carry over profits from one home to another. As a hard money lender, they feature convenient loans for investors and builders alike.


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