The once demoralized housing market is beginning to stabilize. As of this August, home prices were 4.6% higher than they were one year ago. This is the largest year-to-year leap over the course of the last six years. From July to August, we saw a 0.3% increase in housing prices, which also marks the sixth straight month of improvement. The implications of the rejuvenated market will hopefully allow sellers to begin to sell their homes at a more competitive price. In addition, the stock market and national economy should benefit from rising home prices because trends show that people feel wealthier when the market is up. Rather than stashing money away, Americans will feel more comfortable with spending their money.
Arizona, Idaho, Nevada, Utah, and Hawaii have experienced the largest boom in housing prices, while Connecticut, Rhode Island, New Jersey, Illinois, and Alabama have seen the biggest decrease. This statistic goes to show that the western states have benefited the most so far, but the entire nation should be wary of what is to come. A major reason for the continued increase in housing prices could be the warmer spring and summer seasons. With winter on the horizon, we will likely see the market drop slightly. However, if the market has in fact stabilized itself, then perhaps it could survive the winter and continue to improve once the cold has passed.
The market is still buyer friendly, and with the assistance of competitive mortgage rates, there is ample time to purchase a quality home at a reasonable price. If you’re looking to buy, you may want to consider waiting another month or two to see if the market drops off a bit. More likely than not, mortgage rates will rise with the improving market simply due to supply in demand. Lenders lower their rates to attract prospective buyers, but if the buyers are already chomping at the bit, rates will start to climb. Either way, 2012 has proven to be a great year to purchase a home.
About the author: Robert Tutolo is an employee of Total Mortgage and an author of the Total Mortgage Blog