In their current edition of the Home Price Expectation Survey released last week, Pulsenomics asked this question of the 100+ economists, real estate experts and investment & market strategists they surveyed:
“In your opinion, what is the primary driver of recent home value growth in the U.S.?”
Here are the top four reasons given by those surveyed:
As we have stated before, the current lack of inventory in most housing markets has caused home appreciation to increase at greater percentages than historical averages. This means that this is a great time to sell your home as supply is low and demand is high.
However, things may be about to change…
The fortuitous situation sellers see themselves in may soon change for three reasons:
As more homeowners realize their equity situation has dramatically improved over the last four years, they will be more likely to put their homes on the market.
With the residential real estate sector outperforming a sluggish economy, more home builders will be looking to add new construction inventory to a depleted supply of housing stock.
Many banks are just now foreclosing on loans that have been delinquent since the housing bust. These houses will also be coming to market.
Where Are Home Values Headed Over the Next 5 Years?
Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.
Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.
The results of their latest survey:
Home values will appreciate by 4.0% over the course of 2016, 3.4% in 2017 and 3.0% in the next two years, and finally 2.8% in 2020 (as shown below). That means the average annual appreciation will be 3.2% over the next 5 years.
The prediction for cumulative appreciation slowed slightly from 25.0% to 24.7% by 2020. The experts making up the most bearish quartile of the survey are still projecting a cumulative appreciation of 9.9%.
Individual opinions make headlines. We believe the survey is a fairer depiction of future values.
Overall home values are expected to climb significantly over the next few years. Thinking of buying? Now is the time with low interest rates and the potential for significant growth over the next five years. Want to know what your home is worth and considering upsizing or downsizing? Contact us for a FREE market analysis.
With the overall economy just inching along, some experts are questioning whether the housing market can continue its momentum throughout the rest of the year. People are beginning to ask questions such as:
Will disappointing economic news adversely impact housing?
Is affordability a major concern in today’s real estate market?
Are we approaching a new housing bubble?
Are mortgage standards too tight? Or have they loosened too much?
Freddie Mac, in their April Economic Outlook, addresses the disappointing economic news and what impact they think it will have on housing:
“Recent data darkened the growth outlook for the first quarter of 2016. However, despite the disappointing economic reports, we still forecast housing to maintain its momentum in 2016.
We’ve revised down our forecast for economic growth to reflect the recent data for the first quarter, but our outlook for the balance of the year remains modestly optimistic for the economy.”
What about real estate?
Freddie Mac was much more optimistic about housing…
“We maintain our positive view on housing. In fact, the declines in long-term interest rates that accompanied much of the recent news should increase mortgage market activity.”
They went on to conclude:
"We expect housing to be an engine of growth. Construction activity will pick up as we enter the spring and summer months, and rising home values will bolster consumers and help support renewed confidence in the remaining months of this year."
4 Reasons to Move Up to Your Dream Home This Spring
Spring is in full force; the summer months are right around the corner. If you are debating moving up to your dream home, here are four great reasons to consider listing your current home and moving up to your dream home now, instead of waiting.
1. Buyer Demand is High & Inventory is Low
Recent numbers show that buyer demand is at the highest peak experienced in years, and inventory for sale is at a 4.5-month supply, which is still markedly lower than the 6 months needed for a historically normal market.
Demand in many markets is far exceeding the supply, and more properties in March sold in less than 30 days (42%) than in any month since last July.
Listing your home today can greatly increase exposure to buyers who are out in force and ready to act.
2. Prices Will Continue to Rise
CoreLogic recently released their latest Home Price Index in which they predict that national home values will appreciate by 5.3% by this time next year.
The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting for your current home’s value to increase before selling could price you out of your new home if you aren’t careful.
3. Mortgage Interest Rates Are Still Near Record Lows
Interest rates have remained below 4% for some time now and are substantially lower than the rate previous generations paid when getting a mortgage.
The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison projecting that rates will rise over the next 12 months.
An increase in rates will impact YOUR monthly mortgage payment. Even an increase of half a percentage point can put a dent in your family’s net worth. Whether you are moving up or buying your first home, your housing expense will be more a year from now if a mortgage is necessary to purchase your home.
4. It’s Time to Move On with Your Life
The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait?
Look at the actual reason you are buying and decide whether it is worth waiting. Have you always wanted to live in a certain neighborhood? Would a climate change be just what the doctor ordered? Would you like to be closer to your family?
If the right thing for you and your family is to move up to the home of your dreams this year, buying sooner rather than later could lead to substantial savings.
Billionaire: Buy a Home… And if You Can, Buy a Second Home!
Three years ago, John Paulson gave a keynote address at the CNBC/Institutional Investor Conference. In his speech, he told those in attendance that he believes housing will continue its strong recovery for the next 4 to 7 years, saying that:
"The housing market has bottomed. It's not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high."
When asked how the average person could take advantage of the current real estate market at the time, Paulson said:
“Buy a home and, if you can, buy a second home.”
Two years ago, Paulson reiterated his statement, saying:
"I still think, from an individual perspective, the best deal investment you can make is to buy a primary residence that you're the owner-occupier of."
Who is John Paulson and why should you listen to him?
Paulson is the person who, back in 2005 & 2006, made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell.
What do others think of Paulson?
According to Forbes, John Paulson is:
“A multibillionaire hedge fund operator and the investment genius.”
According to the Wall Street Journal, Paulson is:
“A hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were.”
So… Is what he said still true?
The core reasons behind Paulson’s statements still ring true today, but why does he believe homeownership is such a great investment?
Paulson broke down the math of homeownership as an investment:
1. "Today financing costs are extraordinarily low.”
The latest numbers from Freddie Mac show us that you can still get a 30-year mortgage at historically low rates of under 4%.
2. “And if you put down, let's say, 10 percent and the house is up 5 percent,” as many experts predict, “then you would be up 50 percent on your investment."
How many are seeing a 50% return on a cash investment right now?
Paulson goes on to compare the long term financial benefits of owning versus renting:
3. “And you’ve locked in the cost over the next 30 years. And today the cost of owning is somewhat less than the cost of renting. And if you rent, the rent goes up every year. But if you buy a 30-year mortgage, the cost is fixed.”
Whenever a billionaire gives investment advice, people usually clamor to hear it. This billionaire gave simple advice – if you don’t yet live in your own home, go buy one.
The survey revealed that investment-home sales in 2015 jumped 7.0 percent to an estimated 1.09 million from 1.02 million in 2014.
Lawrence Yun, NAR’s chief economist discussed the increase in the number of sales:
"Despite a smaller share of distressed properties coming onto the market, investment purchases reversed course in 2015 after declining for four straight years. Steadily increasing home prices and strong rental demand appear to be giving more individual investors assurance that purchasing real estate will diversify their portfolios and generate additional income if they decide to rent out the home."
Prices Are Also Up
The price paid by investors also increased in 2015 by 15.3%.
Tomorrow, we will be providing an infographic that will highlight the other findings about investors from the survey.
It's time to team up! We are two, full time dedicated Realtor Partners making up The Ehlen Team, Home of the Buy and Sell Program. We specialize in the Southeast Valley and live, work and play in Gilbert, Arizona. We are the #1 RE/MAX team in Gilbert, Arizona for all of 2015! We have put over $42,000 back in our clients' pocket in 2015! Visit www.TheEhlenTeam.com or www.BuyandSellProgram.com for more information or contact us at 602-320-7056 or info@TheEhlenTeam.com today!