You might find this hard to believe, but home prices are rising twice as fast as consumers think they are. Lack of awareness could be costing home buyers thousands each year they delay their purchase.
According to Fannie Mae’s monthly National Housing Survey, 41% of surveyed consumers think it would be “difficult” to get a mortgage approved today with some believing that their credit is too poor. Others think they lack sufficient home equity. Interestingly, that data shows that these concerns are really unfounded!
As an example, one year ago, consumers told Fannie Mae that home prices would rise 2.6% over the next twelve months. Values gained more than twice that, as it happened.
Rising home values are positive returns on investments
In a modest inflationary environment, increases in home prices can be a good thing. If the price of the home is rising, the homeowner is also increasing their purchasing power, as well as their return on investment.
Historically, if investments are rising and inflation is tempered, the economy is thought to be moving along at a productive and profitable pace. Everybody has heard the phrase “a rising tide lifts all boats” – and that data shows that’s where we are most likely headed. So while the existing homeowners are increasing their purchasing power, the buyers who want to enter the market are also gaining financial strength. It really is a double whammy for buyers and sellers!
Buyer Education of the Current Situation is Key
There is real opportunity for potential home buyers out there – and Realtors and lenders need to help folks understand the implications of underestimating the rise of housing prices. Effectively communicating the value of the market is crucial to supporting the needs of potential buyers and sellers.
If done well, there should be plenty of support for the owners looking to upgrade and the new buyers wanting to enter the market for the first time. Hence, a rising market like this can create opportunities for the entire real estate community, including the new owners.
Since the election, rates have increased – but have started to moderate over the last few months. Make sure you have a solid relationship with a lender that has command of all the products to help figure out the best option for you!