As the housing market approaches the fall and winter months, there may be a sudden slowdown in activity. However, based on new data, declines in home sales and values may not be as drastic this year.
According to a report from Redfin, during August, property values increased 5 percent from the previous month in 19 of the largest housing markets. This was the first time prices grew during that time in the company’s history.
“While September now seems likely to be down nearly 20 percent from August’s peak, we were surprised after Labor Day to see a relatively large number of new customers begin touring homes for the first time, which has given us reason to be optimistic about the rest of the fall and even the year ahead,” said Redfin CEO Glenn Kelman.
Meanwhile, values grew in August in 17 of the cities. Phoenix saw the biggest gain, after prices jumped 31 percent from August 2011. In contrast, they fell 4 percent in Chicago, which was the largest slip.
What does the future have in store?
Rising home values are a positive for a number of reasons. First, this could bring more underwater homeowners out from under negative equity. Since they will not longer owe more money for their homes than they are worth, many will look to sell. This would help bolster a shrinking home supply.
Since buyers will have more options to buy, one industry expert argues that increased sales would have a positive impact on the overall economy.
“The economic activity created through these additional home sales would add 250,000 to 350,000 jobs in related trades and services almost immediately, and without a cost impact,” said National Association of Realtors chief economist Lawrence Yun.
Lending standards an obstacle
Following the real estate bubble burst, many lenders enacted much stricter lending standards. These have made a trend of increased sales easier said than done.
Luckily, borrowers may still have options. Specifically, mortgages backed by the Federal Housing Administration have more lenient standards when it comes to credit requirements and income levels. This could make purchasing property an attainable goal for many.
By staying up-to-date on a fluctuating housing market, you’ll be able to make informed decisions when it comes to refinancing your home loan or qualifying for a mortgage. Using a home mortgage rate calculator provided by Freedom Mortgage to determine your best course of action could keep some extra cash in your pockets every month.
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