There has been a lot of talk about housing prices and if they are going to get much lower than they are right now. Fortunately for some homeowners, due to some recent evidence, it looks like they’ve hit rock bottom and they are on their way back up. This is good news for some homeowners who owe more on their home than its current market value because if they are looking for an opportunity to sell their home, they might be able to get out from underneath it without being responsible for too much debt owed on it.
According to Nick Timiraos of the Wall Street Journal, home prices increased for the spring and summer months for the last several years because that’s when home sales are at their best. Home buying activity has seemed to drop off for those years during the fall and winter months. But things seem different this year. The prices of homes in July actually increased by almost 4 percent compared to the same time last year. This is the biggest increase in at least six years. In addition to that, home prices have gone up by more than 9 percent just since February of this year.
But don’t get too excited just yet. There is some bad news, says Timiraos. While home prices currently look good when compared to the same monthly time periods of the year before, the economy is still looking relatively uncertain. Wages certainly aren’t keeping up with the increase in housing prices so home buyers are going to be few and far between. In addition to that, those who are looking to buy a home run into another roadblock – the difficulty of qualifying for a mortgage. Underwriting standards make it almost impossible to get a mortgage loan if you have a bad credit score. Also, many families have too much mortgage debt. They are underwater in their loans and simply cannot get out of their agreement to shop for a new house. And many of those who aren’t underwater don’t have enough equity in their current home to have a down payment ready to purchase another home, even if they are downsizing.
While the rock bottom low prices may be behind us, experts like Mark Fleming, chief economist at CoreLogic, warn consumers against getting too enthusiastic about a full recovery. The increase in prices isn’t likely to continue in the same pattern that it has in the last six months. They will probably stay close to the prices they are at now…at least for awhile.
What this means for the average homeowner is that recovery is on its way. If you have been discouraged because you want to sell your home but you owe too much on it compared to what it’s worth, there may be a light at the end of the tunnel. If you can ride out the market for a little while longer, home prices may get a little closer to what they were when you purchased the home to help relieve some of the financial burden when you put your home on the market.
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