Housing Market Prices – A “Return to Normalcy”

With all of the talk of a Recession vs. a Depression, why lower interest rates are not necessarily a good thing for the economy but a great thing for homeowners, and how unemployment affects the stock market; it can be a very confusing world for home buyers, homeowners, and home sellers alike.  With the announcement of a decrease in the unemployment levels, home pricing “hit its peak” (or one of them) and has now seemed to level off.  Let us explain why that is a good thing:

First of all, home pricing hit a record high in April, 2013, with a 12% average increase nationally.  Some markets saw as much as a 20%, 1-year jump in pricing.  While this is GREAT news for the housing sector, it is not a sustainable level.  If home prices continued to increase over the next several months or years, pretty soon, homes would be overvalued and 1) no longer be affordable for the income in the market and 2) would increase the amount of rent charged for housing.  So, house price increases slowing down or leveling off is actually a sign that the real estate market is returning to normal.

One of the reasons that home prices enjoyed such a staggering increase is because of the disappearance of the foreclosed home.  For the last few years, foreclosures have flooded the market and investors have been right behind them, buying up houses in bulk at significantly reduced rates.  As investors disappear from the market, so do the deals, and pricing immediately takes a positive upward turn and a big step back to normalcy.
What this means for you as the home buyer is that if you are going to make a deal on a new home, the market is still “empty” enough that you can do so.  With the increase in home pricing values, homeowners that had previously been “underwater” with their homes have found their home values coming “back to center.”  In fact, according to CoreLogic, a real estate research firm, 850,000 residential properties returned to positive equity during the 1st 3 months of 2013.  Now that homeowners won’t lose money on the sale of their house, they are more likely to sell their house.

With that being said, it’s too soon to say it’s a seller’s market, but those days are getting a lot closer, so you should definitely take advantage of the still record-low interest rates and the reasonably priced inventory that is currently on the market.  At Bedico Creek Preserve, we have had builders buying lots from us consistently during the 1st 6 months of this year.  We have a lot of construction going on and a lot of new homes going up.  You should definitely take a drive out to Madisonville, Louisiana to see what is going on in our subdivision!  Call 985-845-4200 or E-mail [email protected] for more information.

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