There have been years of instability in real estate since the recession. Now, the housing market could finally be approaching its bottom. But what does this mean for buyers?
According to the Standard & Poor’s/Case-Shiller Home Price Index, home values posted nearly seven straight months of declines. But a new survey of economists by the Wall Street Journal found that nearly all of them think prices have hit rock-bottom.
Moving forward, they should start to trend into positives. Only three economists claim prices will keep falling.
Economists aren’t always right about everything. But this is the first time in years that they so unanimously agree on the issue.
“Even with the overall economy slowing, the budding recovery in the housing market appears to be gradually gaining momentum,” said one economist.
Prices could rise in the near future
As a result of the recent change, home prices could start to rise. This could make it more costly to buy property in the future. However, buyers who get in now should be able to see their value increase.
Current homeowners who have been unable to sell because they are underwater on their loans may also be more willing to sell. Should this occur, inventory levels could grow significantly, giving buyers more options for homeownership. That larger supply will help keep prices from growing too rapidly.
However, this is often a slow process, and in order to make up for the thin property supplies, home building activity has surged this year. According to a report from the National Association of Home Builders, new-home starts rose 26 percent in May from a year earlier, further boosting the inventory.
More foreclosures could add to the thinning inventory
Additionally, the home repossession rate should climb in the near future as well. This is the result of banks reviving the foreclosure process after the recent settlement between the nation’s largest lenders and state attorneys general.
While this could spell bad news for households already in default, this could actually be a positive in the long run. In the past, distressed properties added downward pressure to home prices.
Now, a growing number of buyers are actually utilizing FHA loans such as the 203k rehab mortgage to buy these properties. Bargain prices paired with mortgage rates hovering near record lows have pushed the affordability of buying foreclosures and short sales to an all-time high.
Getting your daily dose of mortgage news is a great way to start considering the option of refinancing your home loan. By comparing mortgage rates with Freedom Mortgage you’ll be able to make an informed decision about the lifespan and monthly payments of your home loan.
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