When Might Home Prices Reach Their Threshold?: 5 Considerations
Most people have witnessed, both, up, and, down, real estate markets, and conditions, such as sellers, as well as buyers markets, and, many, situations, in – between! For the past few years, in many areas of the country, house prices, have risen, consistently, year – over – year. This is probably due, to a variety of reasons and circumstances, including, but not limited to: historic – low mortgage rates; improved job market; greater consumer confidence; the desire to own their piece of the so – called, American Dream; the quality performance of the American economy, including the Stock Market; etc. Many have wondered, when, and if, we will reach a threshold, in terms of home prices, and why. With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 considerations/ factors, which might have an impact.
1. Interest/ mortgage rates: When overall, interest rates, are low, mortgage rates, generally, act, similarly. In recent memory, I recall interest rates, as high as the high teens, to the present low levels, between 3.5 and 4.5%. When rates are low, it means, potential homeowners, can purchase more house, for their dollars, because, they qualify for higher mortgage amounts. The opposite occurs, when/ if, these, rise, in the opposite direction. Therefore, if, we witness, a rise, especially if they are significant, in rates, the result, will, most likely be, either, limiting, or lowering home prices!
2. Overall economy: The greater the overall economy, or, at least, the perception of this, the better the housing market. When these positive conditions occur, we often, observe a sellers market, because there are more buyers, than corresponding, houses, for sale, at the time. This, creates, according to the Laws of Supply and Demand, buyers having to, and being willing to, pay more, for their homes.
3. Job confidence: The greater the public’s confidence in the job/ employment market, and job security, the stronger the real estate conditions. This results in the costs, to purchase, going up! When confidence falls, buyers are often, more hesitant, to make such a significant move, and, may result, in a buyers market, lowering home pricing.
4. Consumer confidence: When the overall perception, is strong, by consumers, housing and real estate, usually, are more robust! When this falls, we witness the converse!
5. Affordability: Pay attention to rental pricing, because, when more people buy, there are usually, more rentals, available, and, thus, rents, remain stable, and/ or, drop! The question is, at what point, to potential buyers, perceive this, as becoming unaffordable?
Although, traditionally, over – time, real estate has out – performed, most other asset appreciation, no one can read into the future! Smart buyers and sellers, pay keen attention, to all the factors, discussed, as well as other, relevant ones!
Richard has owned businesses, been a COO, CEO, Director of Development, consultant, professionally run events, consulted to thousands, conducted personal development seminars, for 4 decades, and a RE Licensed Salesperson, for a decade+. Rich has written three books and thousands of articles. Website: http://PortWashingtonLongIslandHouses.com and LIKE the Facebook page for real estate: http://facebook.com/PortWashRE
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