Five reasons why home prices are on the rise by Ana Hodge (Keller Williams Signature Partners) “Your real estate consultant in Cobb county”
If you have been watching the market recently, whether because you want to buy or sell or out of simple curiosity, you have probably noticed that home prices are going up. In a recent article released by the Wall Street Journal five factors have been determined to be perhaps at fault for the increase. These factors are:
1. The rise in housing affordability – low interest rates and home prices are drawing more buyers out into the market.
2. The rise in household formation – “which is expected to hit 1 million new households this year. That is up from an average of 570,000 over the last five years, according to data by Bank of America Merrill Lynch.”
3. The rise in rents – The high number of people for whom rent is the only resource drove rent prices up, therefore more investors want to purchase properties to rent out and more renters to second-guess why they are paying so much in rent when they could buy.
4. The decline in distressed sales and foreclosures – ” which has fallen significantly this past year. While distressed sales are still high by historical standards, they have fallen from their peaks in most markets, helping to alleviate the downward pressure on home prices in many areas.”
5. Inventories of homes for-sale are at their lowest levels in nearly 50 years – “and builders have cut back on construction and many home owners are waiting to sell until they can recover some equity on their properties.”
Source: “Five Reasons Home Prices Have Been Rising,” The Wall Street Journal (Nov. 27, 2012)
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