Home Prices Are Rising, But This is Not a Real Estate Bubble

Home Prices Are Rising, But This is Not a Real Estate Bubble

Real Estate Bubble

I 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. I want to explain why these concerns seem to be quite 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.

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

Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming | Simplifying The Market

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:

Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming | Simplifying The Market

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, however, until then we will continue to see prices rise steadily.

Previewing Homes For Clients

Previewing Homes For Clients

Previewing Homes For Clients

Busy busy weekend folks, even with the big storm coming in. What I have here is not an award-winning video by any stretch of the imagination. It is just a quick update. This was me this morning running around to a few houses for some clients of mine to proxy view homes for them that just came on the market. That was before I had to show homes to other clients coming in to town, and after having written an offer on another home before that. Oh, and it was my first daughter’s birthday!

It is absolutely clear to me that we need to be able to operate quickly in this real estate market. I looked at three places for them and we wrote on one this evening! Always happy to go the extra mile for my clients.

A New REO Lake Tahoe Home Available

A New REO Lake Tahoe Home Available

An awesome new REO Lake Tahoe home just became available. What’s even better is that it is in Montgomery Estates, one of the most highly desirable neighborhoods in the area! I just went in and previewed this a short time ago and fell in love.

It obviously needs work and looks like it was abandoned some time ago. With some sweat there could be major equity gained. It is a 3 bedroom 3 bath home listed at $439,000 right now. Want to flip it? Fixed up nicely and based on recent comparable properties I think it could sell for $580,000 to $600,000. Here’s info on it directly from the MLS:

“Situated in the well desirable Montgomery Estates neighborhood. This 3 bedroom 2 1/2 bathroom home is across the street from forest land and has partial mountain and forest views. With high vaulted ceilings, living room, kitchen, dining area and a master bedroom located upstairs. The additional two bedrooms and full bathroom along with the laundry room with access to backyard is located downstairs. The home house great potential with value.”

This place is going to go SO fast. When I was there two other groups of Realtors were in there and two more were rolling up as I was leaving!

Thinking of Buying a Home? What Are You Waiting For?

Thinking of Buying a Home? What Are You Waiting For?

The Time to Buy is Now

With spring right around the corner, you may be wondering if you should wait to enter the housing market. Here are four great reasons to consider buying a home today instead of waiting.

Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.3% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.4% over the next year. The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects home values to appreciate by more than 3.2% a year for the next 5 years.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained below 4%. Most experts predict that they will begin to rise over the next 12 months. TheMortgage Bankers Association, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up almost three-quarters of a percentage point by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

Either Way You Are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Bottom Line

If you are ready and willing to buy, find out if you are able to. Let’s get to together to discuss finding you your dream home.

10 Reasons This Tahoe Cabin is Perfect For You

10 Reasons This Tahoe Cabin is Perfect For You

Tahoe Cabin List

  1. Priced just under $400,000!
  2. Brand new 50-year roof.
  3. Fantastic knotty alder laminate flooring throughout.
  4. Beautifully remodeled kitchen with custom cabinets, granite counter tops, and new appliances.
  5. Huge Trex deck that is also rated for a hot tub to be placed on it!
  6. Freshly installed high-end Hunter Douglas windows and coverings.
  7. Large upstairs loft area.
  8. It comes furnished!
  9. There are 600 square feet of additional coverage to use or sell.
  10. A two car garage AND a partially completed basement!

Details

Price: $395,000

Address: 1555 Oflyng Dr., South Lake Tahoe, CA 96150

Square Feet: 1304

Beds:  3

Baths: 2

Year Built: 1976

Lot Size: 20517 square feet

 

1555 Oflyng

Tahoe Chalet Information

Beautiful, updated, and cozy Tahoe mountain chalet. A large circular driveway, and massive wrap-around deck greet you as you walk up to this home which also has a brand new 50-year roof. Inside you’ll immediately be wowed by the stunning alder laminate floors, large new Hunter Douglas vinyl windows looking out on the forest, and a remote controlled gas fireplace. You can walk out to the hot-tub rated Trex deck from the remodeled kitchen which has granite counter tops and stainless steel GE appliances. On the first floor are two bedrooms, a hallway closet with your laundry, and a modernized bathroom. Up the stairs is another updated bathroom with a wonderful loft/office to the front of the home, and the master bedroom to the rear of it. The home features central heating AND air conditioning, a partially completed basement, a two car garage, it even comes furnished, and 600 sf of additional coverage to use! Take a look at this perfect Tahoe cabin, and you’ll feel like you’re coming home.