U.S. Housing Market
This year’s housing economy isn’t doing the best so far. It’s actually facing a strange unusual dilemma: “too few people are selling homes and yet too few buyers can afford the homes that are being sold.” (Boak, J) The prices of home buying are just increasing and last year’s average of a home sold jumped to nearly 13.5%, but that still doesn’t convince homeowners to sell. The more the housing prices increase, the less new homeowners are willing to buy. Say I just got married and my wife and I were looking at houses to start up a family. We would be looking for a house that is affordable and would greatly benefit us in the long run. The fact that housing prices are increasing and people aren’t convinced to sell their home or purchase a home would greatly discourage my wife and I from owning a house right after our wedding. Well the article that I am writing about talks about how not only are homeowners not selling, there aren’t any people taking chances in buying homes. Mortgage rates are rising and overall, higher prices have made homes costlier for first-time buyers as well as for all-cash investors. (Boak, J) The house economy will continue to rise this year and will make it more difficult for new-home buyers to even think about buying a home. The average prices nationally are expected to rise by single digits this year. The higher prices will be in growing areas such as Seattle and Austin, Texas. So let’s go back and say my wife and I were looking for areas to live in. We would look up online the growth rate of the communities we were interested in because the higher the growth rate of the community, the higher the prices for houses. And not only will the growth rate effect prices, but it will affect construction of more houses and that will increase the cost of houses. Although prices will be gradually increasing in some areas, lenders are easing the barriers for those who don’t have that incredible credit score.
Talking about rising prices in growing communities, the second article I read talked about the median cost of houses are increasing and will be close to the peak reached in 2006 before the national market crash, according to the study from the Demand Institute. The article went on and said that among the 50 largest metropolitan areas where housing prices are expected to appreciate between 2012 and 2018, the top five will see rises on average of 32 percent, while the bottom five will average gains of only 11 percent. The cities expected to report the largest increase in median prices are Memphis, Tampa, Jacksonville, Milwaukee and St. Louis. Those with the lowest projected price appreciation are Washington D.C., Oklahoma City, Denver, Minneapolis and Phoenix. (Chadbourn, M) It all depends on different cities that have the highest growth rate or increasing growth rate and the for the states that have increasing growth rates such as New Mexico, Mississippi, Maine, etc. So advise for new home buyers looking for a community and a house to live in is to do your research and pay attention to the state’s and the city’s growth rate. Markets that experienced the biggest run up prices during the bubble have much longer road ahead to regain their prior peaks. For instance, in Nevada, prices will likely be 45 percent below their 2006 peak by 2018 and the state of Nevada was among the states that experienced the largest price appreciations during the boom and the hardest fall. (Chadbourn, M) I can see most of the states prices increasing but each state will be at a different rate. The study in the second article predicted that the national median price for an existing single-family home will rise at a much slower rate in the coming years than in 2013, when prices advanced 11.5 percent. The study sees prices growing at an annual rate of 2.1 percent between 2015 and 2018, as supply and demand begin to even out. The demand is going to increase over these next five years due to the