Generally, each of the last three years anyway, home prices have increased in the spring and summer, when more people are buying homes, before giving back all of those gains and then some in the fall and winter, when activity cools. Winter can be a good time to pick up a bargain, or a market reject.
It's beginning to look like that might not happen this year, absent a major stumble for the economy.
Home prices in July were up by 3.8% from one year ago, the largest year-over-year jump in six years. Moreover, prices have shot up in San Francisco from February, when they registered their lowest levels of the housing downturn. There's evidence to the case that U.S. home prices may have hit bottom earlier this year. Even though prices may soften in the autumn, we have a much different supply and demand dynamic in the San Francisco Bay Area.
So when people say they believe home prices haven’t reached a bottom—that this year’s seasonal gains will be wiped away by January or February of next year—here’s the relevant question: Will home prices fall in the next six months? Barring an unforseen catastrophe probably not here. Anything, of course, is possible. Home prices tend to cool in the winter but will that happen in San Francisco or Marin? Our economy is good, better than most, and demand is strong.
Home prices in the last six months are more an indication of how prices “over-shot” over the past year. Investors, sensing deals, began buying up homes. So did homeowners sensing that interest rates had likely hit bottom. The most likely scenario for home prices over the next year is that they may rise, but not at the breakneck pace of the past few months.
There are other little problems. It’s still hard to get a mortgage, and many households have too much debt. Millions of homeowners owe more than their homes are worth. Millions more have enough equity to sell their house but not enough to make a down payment on their next house and pay a real-estate broker’s commission.
As we’ve written before, the strong rise in home prices this year owes as much to sharp declines in inventory as it does to demand-side improvement. Banks have been much slower to take back and list foreclosed properties, easing pressure on home prices but leaving a bloated “shadow inventory” of potential foreclosures. That's something I can help you with, give me a call.
North Bay Homebuyers
Your source for Real Estate in San Francisco and Marin
It's beginning to look like that might not happen this year, absent a major stumble for the economy.
Home prices in July were up by 3.8% from one year ago, the largest year-over-year jump in six years. Moreover, prices have shot up in San Francisco from February, when they registered their lowest levels of the housing downturn. There's evidence to the case that U.S. home prices may have hit bottom earlier this year. Even though prices may soften in the autumn, we have a much different supply and demand dynamic in the San Francisco Bay Area.
So when people say they believe home prices haven’t reached a bottom—that this year’s seasonal gains will be wiped away by January or February of next year—here’s the relevant question: Will home prices fall in the next six months? Barring an unforseen catastrophe probably not here. Anything, of course, is possible. Home prices tend to cool in the winter but will that happen in San Francisco or Marin? Our economy is good, better than most, and demand is strong.
Home prices in the last six months are more an indication of how prices “over-shot” over the past year. Investors, sensing deals, began buying up homes. So did homeowners sensing that interest rates had likely hit bottom. The most likely scenario for home prices over the next year is that they may rise, but not at the breakneck pace of the past few months.
There are other little problems. It’s still hard to get a mortgage, and many households have too much debt. Millions of homeowners owe more than their homes are worth. Millions more have enough equity to sell their house but not enough to make a down payment on their next house and pay a real-estate broker’s commission.
As we’ve written before, the strong rise in home prices this year owes as much to sharp declines in inventory as it does to demand-side improvement. Banks have been much slower to take back and list foreclosed properties, easing pressure on home prices but leaving a bloated “shadow inventory” of potential foreclosures. That's something I can help you with, give me a call.
North Bay Homebuyers
Your source for Real Estate in San Francisco and Marin
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