Home Prices Move Up in 151 Metro Markets
After 6 tumultuous years, the housing market has finally found its balance. According to a report from Fiserv, during the first quarter of 2012, single-family home prices increased in 151 metropolitan housing markets as comparing to the first quarter of 2011.
These 151 areas account for 40% of Fiserv’s total tracked markets and the data-tracking company’s model project home values to rise 5 percent between the first quarters of 2013 and 2014.
Not surprisingly, cities hard-hit by last decade’s housing downturn are showing strength. Home values in Detroit, Michigan, for example, gained 8.6% as compared to last year; and, Miami, Florida gained 6.4 percent.
Cities still struggling with high foreclosure rates such as Atlanta, Georgia; Las Vegas, Nevada; and, Memphis, Tennessee showed an overall depreciation of -17.4%, -7.4% and -4.7%, respectively.
Supply And Demand Dictate Home Prices
Home values are a function of supply-and-demand. When the supply of homes for sale grow faster than the demand for home, home values sink. Conversely, when the supply of homes for sale falls relative to the demand for homes, home values rise.
This is one reason why the national foreclosure pipeline is watched so closely. Foreclosed properties add to a city’s supply of homes for sale and, because foreclosed properties typically sell at discounts of up to 20% as compared to comparable properties, rampant foreclosures across an area will often surpress home values, in general.
The good news is that banks have become more adroit in their handling of delinquent homeowners, reducing the number of homes that become bank-owned REO, and helping to keep home supplies low.
According to the National Association of REALTORS®, there are fewer than 2.4 million homes for sale nationwide — a 24% reduction in just 12 months.
Is The Window Closing For “Great Deals”
Today’s housing market has three great things going for it.
One, mortgage rates are at the lowest levels of all-time — the 30-year fixed rate mortgage rate has been under 4 percent all year long. Two, home values in many U.S. cities are only recently off their respective bottoms, meaning that home equity may build quickly for tomorrow’s homeowners. And, three, low-downpayment mortgage programs remain readily available. The FHA has its 3.5% downpayment program and both the VA and USDA allow for 100% in many U.S. markets.
If you’re a home buyer, or plan to be, you may find the best deals in housing to be the ones you find today.