No Worries About Home Prices
No Worries … Home Prices Are Coming in for a SOFT Landing!
Home prices have appreciated considerably over the last five years. This has some concerned that we may be in for another dramatic correction. Howev er, recent statistics suggest home v alues will not crash as they did a decade ago. Instead, this time they will come in for a “soft landing”.
The previous housing market was fueled by an artificial demand created by mortgage standards that were far too lenient. When this demand was shut off, a flood of inv entory came to market. This included heavily discounted properties (foreclosures and short sales).
Today’s market is totally different. Mortgage standards are tighter than they were prior to the last boom and bust. There is no fear that a rush of foreclosures will come to market. The Mortgage Bankers’ Association just announced that there are fewer foreclosures today since 1996.
Case Shiller looks at the percentage of appreciation as compared to the same month the year prior. Here is a graph of their findings ov er the last ten months:
As we can see, home price appreciation is softening as more inventory comes to market. This shows that real estate prices are not crashing, but merely returning toward historic appreciation number of 3.6% annually.
Bottom Line: Home prices are leveling off. Long Term, that is a good thing for the housing market!
Want more information on how YOUR real estate situation might be affected by this information?
Call us at Michael Harper Real Estate to answer your questions!
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