The Real Reason For Home Price Increase
There are many unsubstantiated theories as to why home values are continuing to increase.
From those who are worried that lending standards are again becoming too lenient (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.
However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.
It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart 1).
According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes has been below six months for the last five years (see chart 2).
If buyer demand outpaces the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.
Mortgage Payment Across Time Average – Interest Rate and Mortgage Payment
The average 30-year fixed mortgage rates and the approximate payment for a $250,000 mortgage.
Payments are principal and interest only based on a $250,000 fully amortizing mortgage.
Home Buying Mistakes by Generation
No matter the age or life stage, everyone makes mistakes when it comes to home buying.
From picking the wrong location to buying more house than you can afford, here are the top mistakes home buyers make at every stage.
Top Reasons to Own Your Home
Privacy – Having a space that is solely your own.
Family – Putting the needs of your immediate family and children first.
Financial Investment -The chance to grow your assets and wealth.
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