Housing Price Boom
2013 marks a year where home price appreciation is accelerating at a rate that hasn’t been seen in the last six years. Helping to give hope to real estate owners across the U.S., this is the single largest turn around reported since the fallout in 2006.
In January 2013, the average median house growth was up 8.1-percent from the previous year. This marks the largest single gain in more than 6-1/2 years, with figures being based on housing prices in 20 major metropolitan U.S. cities. Winter always bring the real estate market to a screeching halt, but this past December was an exception, with reports showing a 1-percent increase.
While housing demand is steadily increasing, the number of active homes on the market is decreasing. This is creating a solid market for sellers that feature little competing demand. All-time low mortgage rates are playing a critical factor, helping people maintain lower monthly mortgage payments, which ultimately compete with most monthly rental costs.
While many homeowners have lost substantial equity in their homes over the last six years, leaving them upside down in their loans and unwilling to sell for a loss, contractors have also faced hardships with building loans. All of this has lead to a massive housing inventory reduction. In fact, many investors, faced with short-term loan renewals, have been forced to turn their excess housing inventory into home rentals and apartments.
Experts didn’t predict 2013 was the real estate market return year, but many pollsters are revising their predictions as a strong investor demand, coupled with a growing economy and low inventories, is allowing homebuyers to take advantage of low mortgage rates.
Predictions anticipate that housing prices will appreciate six- to eight-percent this year alone, up from original 4- to 6-percent numbers. Experts also cite inventory shortages that are anticipated to plague 2013, but will help boost existing home values.
Most of the homes that are selling are not even distressed properties. If the U.S. can see a 10-percent gain in current home values, that means more than 4-million American homeowners would no longer be upside in their mortgages, meaning their homes would be worth more than they owe.
Phoenix has seen a remarkable turnaround, boasting gains of 23.2-percent, with Las Vegas shortly following at 15.3-percent and Atlanta at 13.4-percent.
Unfortunately, when prices suddenly soar, economists worry that inflation is occurring at a rapid rate, one where people’s incomes will not maintain the same level of growth. If such an instance occurs, the U.S. could face yet another economic crisis.
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