Two different USA Today articles came out this week and confirmed what the real estate industry has been saying since the beginning of the year. The headings read “Forecast sees annual 4% rise in home prices” and the other stated “Mortgage rates sink to a new low”. Nationwide home prices are down by a third since 2006, but should rise by 4% a year for the next five years, this according to a new forecast by market watcher Fiserv. The positive signs in the housing market has gotten the attention of news outlets locally and nationwide. This is a complete reversal from the last few years where we had daily negative reports regarding the housing downturn.
Investors have been the driving force behind the resurgence. First-time and move-up buyers have decided to join in the brouhaha as mortgage rates have steadily dropped since the middle of 2011. Home affordability and declining inventory has also had a positive affect on the market. The areas hardest hit by foreclosures will experience the largest increase in appreciation. Six of the ten markets where prices are expected to increase most over the next five years are locations that have had at least 50% depreciation from their peaks. Areas like Phoenix, Arizona and Miami, Florida are two of the biggest beneficiaries with asking prices up by more than 20% and inventories are down by 40%.
Mortgage loan rates have plunged to new sixty year lows standing at 3.84% for the week of May 7th. Existing home sales were up 5.2% in March from a year ago. Healthy demand and tighter inventories sparked a 2% increase in home prices nationwide for the months of February through April. 92 of the top 100 largest metro areas showed increases during the three-month period. The three factors that have stimulated the market are the limited number of properties available, high demand from prospective home buyers and low mortgage rates.
Despite the latest drop in rates, Freddie Mac expects 30 year-fixed-rate loans to rise later this year to 4.25% or even 4.50%. That’s assuming the economy continues showing improvement. Guy Cecala from Inside Mortgage Finance stated “Consumers shouldn’t hold out for lower rates, we’re near the lowest you’ll ever see.” All of these positive signs will be predicated on what happens during the Spring and Summer months. Stay tuned. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs, join my professional networks on Twitter and LinkedIn and easy access to view local area homes for sale in Davis, California and the surrounding communities.