This year, your clocks aren’t the only thing springing forward; home prices have increased by leaps and bounds over the last few years!
The last seven to eight years were a chaotic time for the housing market. When the housing market crashed in 2007 and 2008, homeowners nationwide saw the value of their homes plummet overnight. Across the country, millions suddenly found themselves underwater on their mortgages and under the threat of foreclosure.
Others who planned to sell their homes found themselves with few options, just waiting for the market to recover.
However, from late 2011 to today, the housing market made an astounding recovery. The national average home price rose by 20 percent from the first quarter of 2012 to the end of 2014, restoring equity to many of those homeowners who were hit hardest by the crash.
With the home prices so significantly recovered, this year it’s more important than ever to reassess your situation and know where you stand. No matter what the housing market has brought you in recent years, chances are, your home is worth much more than you think! Let’s take a look at why home prices are up, where they are going, and what it all means for you:
Today, There Are Fewer Distressed Sellers
When the housing market first crashed, many homeowners were hit with both the recession and falling home prices. With economic conditions only worsening, homeowners could no longer afford their mortgages. Facing foreclosure, they were forced to try and sell, only to find the owed more on their mortgages than their home was currently worth.
These homeowners, called distressed homeowners, ranked in the millions during the worst of the recession and housing market crisis. With so many homes lost to foreclosure or sold in a short sale for significantly reduced prices, home prices nationwide were kept low.
As the housing market and economy started to recover, the number of distressed sellers shrunk significantly. Large scale real estate investors helped as well, purchasing large quantities of distressed properties and removing them from the market. At the end of last year, distressed sales, or foreclosures and short sales, composed just 9 percent of all sales, down from 14 percent in 2013 and exponentially less than at the peak of the housing crisis1. With fewer cut-rate homes on the market, home prices began ticking up.
Home Prices Have Increased, Unlocking Pent Up Supply and Demand
In 2012, the U.S. economy started to improve, and the housing market began to recover along with it. The following year, the housing market recovered at an astounding pace. Home prices nationwide skyrocketed. According to the National Association of Realtors, the national average home price increased 11.5 percent over 2013 compared to 2012, the strongest yearly gain in home prices since 2005.
Last year, home prices continued to increase, though more slowly. The various home price trackers noted increases between 5 and 7 percent3. This year, home prices continue to march upwards, though at a much steadier pace.
For homeowners, this dramatic increase in prices is helping restore the equity they lost during the housing market crisis. As homeowners regain equity, those who have put off selling their homes are beginning to reenter the market, and the growing demand for housing continues to help drive home prices up.
Inventory Has Been Low, Creating Competition for Available Homes
With more homeowners finally in a position to buy or sell, demand for new homes finally started to increase. However, there were not enough home to meet the rising demand. New home construction practically came to a stand still during the worst of the housing crash. What’s more, many homeowners, unaware of how much the market has improved, have been slow to sell their homes, further limiting supply.
Because there often were not enough homes for sale to meet the growing number homebuyers, buyers were forced to bid higher and higher for the few available properties, pushing home prices up and up!
Today, new home construction is picking up, and as already mentioned, ever more homeowners are finally finding themselves able to sell. Yet demand still out paces inventory slightly, and sellers are still in an advantageous position when selling their homes. If you’ve been thinking of selling your home, now may be the perfect time!
What Does This Mean To Me?
Put simply, your home is probably worth much more than you think. And with home price growth slowing and the market slowly balancing, there may not be a better time to sell your home!
Not only do market conditions still favor sellers, mortgage rates remain at near record lows, giving you more buying power. However, Mortgage rates are rising too as the Fed eases their stimulus and the economy continues to improve. So chances are you can afford more home today than you will be able to later in the year!
Find out what homes down the street sold for!
Free computerized list with maps and pictures of area home sales and current listings. You can access this online at www.MyAreaHomeSalesReport.com For more information, call anytime twenty-four hours a day pre-recorded info-line 1-888-300-4632, enter ID# 1041