It seems as though this is a recurring theme nearly every month. A jump in home prices over the last two months of 22% from last year has certainly caught the attention of both sellers and prospective buyers. Is there a rational explanation for this huge spike in home price gains? Will it continue throughout the remaining months of 2014? After last years appreciation jump, what’s caused the present double-digit bounce?
What’s so different about the present surge in home values compared to last year is the enormous and immediate hike , where as last year there was a much more modest, systematic increase. Heading into this year, most experts predicted some appreciation, with a 3% to 4% prognosis for 2014. These numbers might still hold true for the entire year, but many housing experts are rethinking their original prediction after the huge increases of the first two months. Let’s examine the head-scratcher that has befuddled most of the housing gurus.
Consumer Confidence: This has to be placed at the top because without consumer confidence nothing else matters. Multiple offers have become more commonplace and bidding wars have been cropping up regularly in the most sought-after neighborhoods. Some buyers complain that they are having a hard time securing a purchase, beat out by other bidders, let alone find a bargain. This is strictly consumers feeling confident with their decision to pursue a home.
Lack Of Inventory: Those bidding wars have been created because there’s not enough supply to satisfy the demand. The number of sold properties have decreased year-to-date from 2013 because of the lack of inventory. Those buyers that have lost out to a higher bid are back on the fence, waiting their turn and hoping for another opportunity. This anxiety among buyers, especially those that refuse to lose out a second time have caused many to offer above asking price, which in turn raises home prices.
Interest Rate Increases: The long-term effect with just a slight increase in mortgage rates can add thousands on a 30 year mortgage. Most prognosticators say rates will rise this year and this has created a time is of the essence attitude among home buyers to get it done before that happens. Even if rates rise a bit, there still historically low, comparably speaking. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on selling or buying a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.