1. HOME PRICES HAVE INCREASED BY 2 – 3.5%
With the economy improving and low interest rates, pent up buyers have entered the market decreasing supply and raising prices.
2. INTEREST RATES ARE PREDICTED TO INCREASE
The Federal Reserve has announced that it will soon start tapering its $85 billion monthly bond-purchasing program, which is expected to send mortgage rates rising from recent record lows.
3. LOW INVENTORY OF HOMES
Listed inventory is down 22.5% from a year ago, when there was a 7.1-month supply. prices haven't gone up enough to enable many homeowners to sell and recoup enough to put down on a move-up home. Also, the banks are funneling more of their distressed sales to investors as rental properties.
4. NEW MORTGAGE RULE WILL PROTECT BUYERS
The ABILITY TO REPAY RULE, officially takes effect in January 2014. This rule will protect consumers from risky practices such as "no doc" and "interest only" features that contributed to so many people losing their home in recent years.
5. HOME EQUITY LOANS ARE BACK (HELOC’s)
When a home owner defaulted on their mortgage, Lenders, the secondary lender received money only after the primary mortgage was satisfied, making a HELOC very risky for Lenders.
6. THERE ARE FEWER DISTRESSED HOMES ON THE MARKET
The number of distressed homes is still fairly high at 2.3 million units. However, fewer of these homes are getting a FOR SALE sign, due to the back log with their lender. Bank owned homes (REO’s) are being offered first to large investment companies where they are converted to rental properties.
7. NEW CONSTRUCTION IS COMING
After years of building inactivity and a low inventory of homes on the market, many buyers are welcoming the chance to buy new and have it their way. Record-low interest rates and an uptick in hiring spurred the increased activity by builders. New-home sales are up 15.3% over the past year
8. THE LUXURY MARKET HAS A TAX INCENTIVE
Sales of homes over $1 million surged 51% in November, as high-net-worth owners rushed to list their existing homes and buy new ones to avoid the capital-gains tax hikes in January that were part of the fiscal-cliff deal. Under these changes, high-income earners would pay $88,000 less in taxes if they made a $1 million profit on their home in 2012 rather than in 2013. So, out went the for-sale signs, and down came the inventory of luxury homes in the last quarter of 2012.
CONCLUSION: The housing market is very different today than it was 6 years ago. The Real Estate market is now in full recovery mode.
