Will Real Estate Values Rebound?
Since 2009, homeowners have faced tumbling real estate values resulting in many people owning more on their home than it is worth. Since that time, home values have slowly increased but not nearly enough to make up for the losses suffered by thousands.
What is the future of the real estate market?
Positive signs of growth
While there is no single answer to how or when home values will begin climbing, there are some signs we can look at to see if values will continue to rise.
Some of the factors that will impact how robust growth will be include:
- Foreclosures – as foreclosure rates drop there will be less inventory for homes. This factor alone will put pressure on the market in an upward direction. For banks, this is good news as they are not holding foreclosure inventory and for homeowners, the ability to sell when they are ready versus losing their property through the foreclosure process
- Job and wage markets – while many people do not associate increasing job markets and improved pay with home values, the fact remains that people who have money will consider investing in a new home. In addition, this will help further tamp down the possibility of foreclosures. Higher interest in buying means lower inventories resulting in more demand and higher values.
- Credit and interest rates – when banks are holding tightly to the purse strings, fewer borrowers will qualify for a home mortgage. While this trend, along with upward trends in interest rates may dampen growth overall, there are other factors that may offset this including increasing job stability and wage growth.
Depending on the area of the country, home values are increasing slowly with some areas improving more than others. Over time, provided we are not facing another crisis, values should continue increasing.
Investors and those who are searching for their first home or their retirement home will help fuel this growth.
There are a number of factors that will play a role in how quickly values will rebound; however, over time, values could be back to pre-crash levels within seven to ten years.
Hartwest Financial can provide personal answers to your real estate financing and mortgage questions.