Prices of Homes Are on the Rise — Reason for Concern?

Jul 6, 2018 by admin

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Last year we saw a horrible low as far as home prices were concerned. As a matter of fact, last year we saw a 20-year low in the market. As for right now, home prices in February are up by 10% over what we were seeing last year. So, what does this mean for someone that is looking into purchasing a home? Unfortunately, they’re faced with a major dilemma. Either they can purchase a home right now, even though they will pay more for that home today, versus what they would have paid a year ago or they could wait it out and end up paying more in the end, due to a possible increase in interest rates.

Unfortunately, people out there that are first time buyers are facing a world of hurt right now. There is a high rate of unemployment, debt rates are high, credit standards are becoming much

tighter, and people aren’t saving much money. In other words, it’s making it nearly impossible for any newbie to come in and purchase
their first home. A lot of the experts out there are saying that if prices continue to go on the rise like they are right now that it may cause some affordability problems in the future. This is especially true if rates were to increase above 6%.

Things are starting to look fairly grim, as the budget cuts courtesy of the federal sequester have started to have a negative impact as far as public housing is concerned. The New Albany Housing Authority is making a change in their annual budget cut by 18%.  A cut like this could have an effect on many things. You could see people losing their jobs, a reduction in services and some public housing units could even be closed down. If the issue doesn’t get resolved, Bob Lane, the Executive Director of NAHA says that there could be up to 40 Section 8 units that could be closed down.

As of right now, inventories are extremely small, which leaves a lot of homebuilders out there looking to find quality land, so they can expand on housing inventory. However, there are major problems being faced in Dayton Ohio right now, because there’s not a lot of land out there that is ready and able to be built upon. Homebuilding is expected to improve throughout the 2013 year, but this could create some serious problems for the 2014 year.

The problem is expected to get worse, because an inventory of lots is just simply not going to be there. Of course, it will take a decent amount of time before new lots can be brought online, as well. Therefore, there may be a period where there are no new lots being brought online, despite the demand for new lots. The time it takes for new lots to be developed can be attributed to the fact that there is an approval process and a financing process.