Attn: Homeowners at the “Low-End” of the Market!
Thinking of Adding a Home to Your Holiday List?
With the holiday season in full swing, many of us are spending money, and many may be seeking to purchase residential real estate, either due to relocation, downsizing, or a first purchase. Whatever the reason, it’s no secret that there is a critical shortage of affordable homes on the market. Because of the high demand and low supply of affordable homes, such homes are seeing a more substantial increase in price compared to “higher-end” homes.
What Do the Figures Show?
Home prices jumped 6.2 percent in September alone. This is all a result of a national shortage, with inventory falling for nearly three straight years. Why the low availability? It stems from the housing crash in 2007, when small and large investors bought hundreds of thousands of foreclosed homes and turned them into rental properties. Despite the hot real estate market, homebuilders have yet to reach a historic pace in production. They argue that expenses such as land, labor, materials, and regulations simply do not translate to healthy margins in making less expensive homes. The issue that arises is finding affordable real estate and then, once that is accomplished, seeking real estate attorneys to guide through the contract and purchase.
What Happens Now? In July, the median price of homes sold increased to a never-before-seen number–$258,300. This means that the definition of an “affordable” home is changing. In fact, economists say there is virtually no property priced at truly lower market prices anymore. With the strong fundamentals of housing demand such as low unemployment, faster household formations, and low mortgage rates, many see home prices continuing to rise as much as 10% next year..
The End of the Year Good News
Although the market of affordable home rates is rising, a recent report showed that the average increase in homeowner equity from the third quarter of 2016 to 2017 was $14,888. Over the same period, this lead to a decrease in the number of underwater homes, as negative equity fell 22%.
What Does This All Mean?
While current homeowners reap the benefits of a thriving housing market, a double-edged sword presents itself. If a homeowner chooses to sell because of market gains, the scarce supply of homes may cancel out a significant amount of profit due to the increase in the costs associated with buying a home. As the saying goes: A bird in the hand may not be worth two in the bush.
From the trenches,