Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming

We recently reported that home prices are continuing to rise across most of the nation. This has created concern in some pundits that a housing bubble, like we saw ten years ago, is forming again. We want to explain why these concerns are unfounded.

The current increase in home values can be easily explained by the theory of supply and demand. Right now, the number of families looking to purchase a home is greater than the supply of homes on the market.

Just Listed in Ft Lauderdale	Under $100,000	Under $200,000
Under $300,000	Under $400,000	Under $500,000
Under $600,000	Under $700,000	Under $800,000
Under $900,000	Under a Million	Luxury Homes in Ft Lauderdale

Here is a chart that explains how the months’ supply of housing inventory impacts home values:

According to the latest Existing Home Sales Report from the National Association of Realtors, there is currently a four-month supply of inventory. That puts us in the blue section of the above graphic. Home prices should be appreciating.

The difference in 2006…

A decade ago, the demand for housing was artificially boosted by lending standards that were far too lenient. Today, the strength of the demand for housing is legitimate, as lending standards are nowhere near what they were a decade ago.

For proof of this, let’s look at a graph of the Mortgage Bankers’ Association’s Mortgage Credit Availability Index:

The higher the number, the easier it was to get a mortgage. We can see that from June 2005 to June 2007, mortgage standards were much more lenient than they have been over the last nine years.

Bottom Line

Today’s price increases, unlike those a decade ago, are the result of qualified buyer demand exceeding the current inventory of homes available for sale. Once the supply increases, prices will level out.

If you are thinking about selling now IS the best time, because once more inventory gets out on the market the prices will level off...meaning you may not get nearly as much $$ Money for your home when it levels out because of more competition.  

If you are considering selling your Fort Lauderdale Home or selling anyhome in South Florida contact Jay Cermak Top Fort Lauderdale Real Estate Agent with The Edwards Real Estate Group at Keller Williams Realty.  Call or Text 954.235.3589 and schedule a Real Estate consultation today!

Low Inventory Causes Home Prices to Accelerate

Just Listed in Ft Lauderdale	Under $100,000	Under $200,000
Under $300,000	Under $400,000	Under $500,000
Under $600,000	Under $700,000	Under $800,000
Under $900,000	Under a Million	Luxury Homes in Ft Lauderdale

The National Association of Realtors (NAR) released their latest Quarterly Metro Home Price report earlier this month. The report revealed that home prices are not only continuing to rise but that the increases are accelerating. Lawrence Yun, Chief Economist at NAR, discussed the impact of low inventory on buyers in the report:

"Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead.”

Here are the percentage increases of home prices for the last two quarters:

What this means to sellers

Rising prices are a homeowner’s best friend. As reported by CoreLogic in a recent blog post:

“With demand strong and inventory thin, the share of homes selling for the list price or more has also returned to pre-bust levels. With inventory tight, homes are more likely to sell above the asking price.”

What this means to buyers

In a market where prices are rising, buyers should take into account the cost of waiting. Obviously, they will pay more for the same house later this year. However, asConstruction Dive reported, the amounts of cash necessary to buy a home will also increase.

“These factors have created a situation where the market keeps moving the goalposts in terms of the down payment necessary for first-time homebuyers to get into a home.”

Bottom Line

If you’re thinking of selling and moving down, waiting might make sense. If you are a first time buyer or a seller thinking of moving up, waiting probably doesn’t make sense.

Thinking of Buying or Selling?  Jay Cermak Top Fort Lauderdale Real Estate Agent with The Edwards Real Estate Group at Keller Williams Realty can help!  

Schedule a FREE Real Estate Consultation and we will educate you on the current home buying or home selling process, Conduct a Needs analysis to understand exactly what you are looking for and connect you with great vendors such as mortgage to ensure a smooth Real Estate Transaction!

Home Prices Rising! Appraisers say WHOA!

Each month, Quicken Loans releases their national Home Price Perception Index(HPPI). This month’s report revealed that the difference in appraiser home value opinions as compared to homeowner estimates is continuing to increase. Chief Economist Bob Walters explains:

"Many homeowners around the country are seeing the national headlines about home value increases and they are optimistic about their equity increasing. While some areas are seeing the same level of home appreciation, or even more, there are also some areas that have slower home value increases. This can lead to homeowners and appraisers not quite seeing eye-to-eye.”

Here is a chart showing the increasing difference in opinions:

Though reports of home price increases have garnered many headlines over the last six months, most experts expect residential real estate values to start showing more historic levels of appreciation over the next five years. Walters addressed this issue:

“A slowing of home value increases adds to the misunderstanding of local home values. Appraisers are viewing the housing industry every day; they know when home values growth may be slowing. Homeowners may think values are still skyrocketing, when they have instead returned to more healthy appreciation in their area."

Bottom Line

When pricing your home, you should have a real estate professional help you fully understand where prices are and where they are headed in the future.  Contact The J Team Fort Lauderdale and schedule your Real Estate Consultation today 954-235-3589!

Find out your current home value of your Fort Lauderdale home at http://Sell.JTeamFL.com