Buyers Pay Attention, Home Prices Continued their Rise in January

Lenders like Peoples Home Equity were pleased to read that home prices are performing well. According to a recent March 3rd article release by titled “January 2015 Home Prices Increased 5.7 Percent from a Year Ago,” home prices have increased on a yearly basis for 35 consecutive months. In addition, prices have also increased 1.1% from December 2014 to January 2015.
On a regional basis, Corelogic stated, “Colorado, New York, Texas, and Wyoming reached new highs in home prices in January 2015. Of these four states, Colorado had the largest home price appreciation at 9.1 percent, followed by Texas at 8.3 percent, Wyoming at 8.3 percent and New York at 5.6 percent.”
Some readers may be wondering how much longer home prices may climb. Market pundits and analysts are always trying to find conclusions on housing market moves, but no one knows for sure how long real estate prices may continue to climb. However, there is a strong case as to why prices should continue in an upward trend.
First, there is not enough national housing supply to fit the ever growing demand. Currently, home builders are not creating enough new homes to satisfy the demand and existing home owners are refusing to sell below peak prices, with both factors withholding the supply from equilibrium levels. On the flip side, demand continues to grow. As more Americans continue to become employed, more individuals will be able to build/re-build their credit scores and apply for a home loan with lenders like Peoples Home Equity. This will lead to more pre-approved first-time home buyers searching for real estate, and there is not enough real estate available for sale.
Another strong case for continued higher property prices are mortgage rates. Rates have been at historic lows for the past 6 years ever since the Federal Reserve reduced its core fund rates down to 0.25%. This summer, the Federal Reserve is expected to raise its core rate from 0.25% to at least 0.50%, which will, overnight, increase borrowing rates at lenders like Peoples Home Equity. Americans know that property prices continue to be listed at bargain prices compared to peak levels in many cities like Miami, Phoenix, Las Vegas, and Chicago. Corelogic said, “Nevada had the largest peak-to-drop in home prices, down 35.3 percent from its peak in March 2006.” Further, Corelogic noted that nationally, “including distressed sales, prices were still 12.7 percent below the peak hit in April 2006.” First-time home buyers are very eager to purchase a home since the total cost of a mortgage + HOA fees + property taxes are often less than paying rent! Prospective buyers should jump on the opportunity to purchase an affordable home now before both prices and rates increase in the future.
If you are in need of a mortgage, contact a Peoples Home Equity loan officer today at: 262-563-4026.