FreddieMac: Housing is Stronger Today

In a recent blog post, FreddieMac explained that “housing is stronger today than at any point since the Great Recession began and hit bottom in 2009”. They then gave three reasons which support their position: Home sales are up 13% since their low point. Housing starts are up 50% since they bottomed out. House Prices are up 16% since their trough. Projections Going Forward FreddieMac also believes that the market will continue to improve through 2014. They projected: Home sales to increase about 3% in 2014 as the purchase market continues to evolve Almost 20% growth for housing starts in 2014, which will begin to help ease tight inventories in many markets Home value increases will continue their positive momentum in 2014 Frank Nothaft, Freddie Mac vice president and chief economist, further explained what the housing market may look like in the agency’s April 2014 U.S. Economic and Housing Market Outlook: “Tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected. This is good news for those markets that have room to run on the house price appreciation front, but it’s also going to increase the affordability pinch in many markets, especially along the country’s east and west coasts. Two indicators that are supporting local housing activity are rising consumer confidence and declining unemployment rates.” Bottom Line The real estate market is improving every day. The biggest challenge is a lack of inventory in many markets. If you are thinking about selling, now may be the time to make the move. Source: KCM Blog

The difference between renters and home owners…

Over the last six years, homeownership has lost some of its allure as a financial investment. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth. A study by the Federal Reserve formally answered this question.

Some of the findings revealed in their report:

• The average American family has a net worth of $77,300
• Of that net worth, 61.4% ($47,500) of it is in home equity
• A homeowner’s net worth is over thirty times greater than that of a renter
• The average homeowner has a net worth of $174,500 while the average net worth of a renter is $5,100

Bottom Line

The Fed study found that homeownership is still a great way for a family to build wealth in America.

A home’s Cost Vs. Price

We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first time or repeat buyer, you must not be concerned about price but instead about the ‘long term cost’ of the home. Let us explain. Recently, we reported that a nationwide panel of over one hundred economists, real estate experts and investment & market strategists projected that home values would appreciate by approximately 8% from now to the end of 2015. Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30 year fixed mortgage rate will be 5.7% by the end of next year. What Does This Mean to a Buyer? Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:   Source: KCM Blog