2013’s 3rd Quarter Numbers Bode Well for Real Estate
According to the S&P/Case-Shiller Home Price Index, the 3rd quarter of 2013 not only showed a significant rise in home prices, but it is the first time that prices have risen by a double-digit percentage. The gain over the previous year’s numbers for the 3rd Quarter was an 11% gain. This can be both good news and bad news for economists and market analysts as they try to study the economy’s numbers for signs of a full recovery. Rumors have flown about a double-dip Recession, where inflation will skyrocket, interest rates will rise at a rapid rate, and home prices will once again be at unsustainable high’s creating another “housing bubble.”
Most analysts who spend a lot of time studying the numbers have no fear that there will be another housing bubble because the increase in home prices has slowed over the last 3 quarters. There was only a 3% rise in home prices from the 1st and 2nd Quarters where home prices didn’t rise at all, but they just stayed even.
The positive aspect of rising home prices / values is that homeowners that were “underwater” on their loans before now have either “broke even” or have some equity in their homes. For those that can see that equity, a refinance may be the way to go because even though interest rates have gone up, they are still at historic lows. The amount of money saved in interest and monthly payments can make it worthwhile to go ahead and refinance the home.
With home prices on the rise, builder’s confidence has gone up in the 3rd quarter of 2013. The demand for housing is once again taking center stage as the existing inventory of resale or previously owned homes is being eaten up by the demand of buyers who either recently “come off of the fence,” or now see that it is time to go ahead and buy a home while interest rates are still reasonably low.
For all of these reasons and because real estate is one of the main money producing industries for the GDP (Gross Domestic Product), the continued increase in home prices and therefore home values is good new for everyone who has an interest in the housing market.
