Real Estate Watch – Centermac SD
2017: A Good Year to Buy a Home?
With the steady rise in home values over the last few years, many families are wondering if they should buy a home in 2017. The short answer is yes, and not because we are biased. Many people are concerned we will see another bubble in real estate prices, but I hate to break it to those folks that there is not one on the horizon. The last bubble a decade ago was fueled by irresponsible lending practices, over-building by home builders, and pure speculation. This created a perfect storm resulting in a major housing bust from 2007 through 2008. Today, mortgage lending practices have been reigned in and although home builders are building again, they aren’t able to build fast enough to satisfy the current housing demand. People are qualifying to buy homes the traditional way and the majority of people are buying homes to live in versus as speculative investments. Inventory is at an all-time low and will only get tighter come this summer.
So the question is, how long will values hold on? Realtor.org tracks the Housing Affordability Index, where anything with a measure over 100 means that housing is not too expensive for the average household income. In 2016 the index had a reading of 153, well above 100. In 2006 it had a reading of 108. In the next five years, we are expecting to see Average Annual Household Formations rise to levels we haven’t seen since the baby boomers were buying their first homes. This indicates that future demand will be rising in years to come, helping to further stabilize values. Lastly, according to www.pulsenomics.com, an average cumulative house appreciation of 18.7% by 2020 is expected. When we look at all this data combined, it gives us a positive outlook on home prices and clearly shows there is not a bubble coming any time soon. For those thinking about selling and moving up, now is a great time to consider, seeing that the likelihood of a bubble or drop in prices seems unlikely in the coming years. Overall, it is an ideal time to buy or sell your house!
Sr. Loan Officer
Professional Real Estate Consultant
BRE # 02004228