Mortgage rates after weeks of
slowly rising have returned to lower levels that we experienced 2 weeks
ago. The cause for the interest rate
decline is the emerging concern about Europe’s financial instability and how it
may impact the United States. The
biggest issue in Europe has been the banking crisis in Cyprus that has had
their banks closed for over a week. (Can
you imagine what would happen in the U.S. if the banks closed down for a week
and you could only access your money through an ATM?)
The stock market after initial negative reaction to the Cyprus
banking crisis has now returned to its positive direction now that they seem to
have a plan in place to assist in the financial recovery and stabilization of
the Cyprus banking system.
I feel like a broken record when it comes to writing about
real estate. For months now I have had
the pleasure of writing about the improving real estate market, and this week
is no exception. This week we had 3
significant housing reports released and for the most part they continue to
reinforce the trend of moderate to strong housing growth.
The highlight of all the reports was the Case-Shiller Home
Value Index which showed that home prices are continuing to increase, however
the real story is that they are increasing at a faster pace. Prices were reported to have risen 1% in
February which is on top of January’s .9% and December’s .6% increases.
Additionally, home values are up 8.1% from the same time
last year. The increase in home prices
is actually less surprising than the rate in which they are increasing. If you look back at the last 5 months of home
prices compared to a year ago, reports show that values were up 6.9% in
January, 5.5% in December, 4.2% in November, 2.9% in October and 2% in
September. The pace in which values are
increasing is blowing through virtually every economic forecast and there does
not seem to be any end in sight to this trend.
The main cause of the rapid increases is that employment in
the country is improving which means more people are feeling confident in
making a home purchase. When you combine
that with limited inventory the result is rapid increases in home prices. Although it is likely more homes will come on
the market for the typical Spring market surge, the expected rise in inventory
will not likely impact the rapid rise in values. The amount of pent up demand of buyers in the
market today will rapidly absorb the homes that come on the market.
JJ Mack
916-517-1800
jj.mack@apmortgage.com
www.apmcroseville.com
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