Home prices have made considerable gains in the last four quarters, and the property sector seems the most stable it’s been since the bubble burst. Prices climbed roughly 12% year-over-year in August, with certain housing markets reporting northward of 20% in price gains. We’ve also reached a point where price gains may be stabilizing, and eschewing too drastic of a slowdown, this could further bolster the recovery.
Prominent voices within the world of finance have come forward with supportive words as well. As Bloomberg noted recently, Warren Buffet has said forthright that despite progress, the housing market is far from recovered. Buffet was on the record proclaiming in early 2010 that the housing market would recover within a year or so. While this claim more than halved the genuine recovery time, his prediction was based upon sound fundamentals.
Buffet centered his projection upon the dual motivators of the growing demographic of potential homeowners and limited home inventory. The further lay out the market technicals, borrowing costs remain near record lows. While there’s been persistent concern that rising mortgage rates might turn away young homebuyers, mortgage rates recently hit a four-month low. The disappointing returns from the latest job reports have motivated investors to gravitate toward U.S. bonds, causing the average rate for a 30-year fixed rate mortgage to drop to 4.13% the week ending October 24.
So Where’s the “Caution” in this Optimism?
The Bloomberg report furthers quotes Buffet as stating forthright that pricing is clearly not at an equilibrium point. Assuming current trends persist, there’s a chance equilibrium might be reached within the foreseeable future. Granted, we’ve reached a complicated turning point where recovery in the housing market is no longer proceeding at a flawless upward trajectory. According to figures released from the Department of Commerce, new U.S. home …read more