Median Existing Single-Family saw their largest annual gain in more than seven years in the first quarter of 2013. The median home price rose from $158,600 to $176,600, a gain of 11.3%!
“The supply/demand balance is clearly tilted toward sellers in a good portion of the country,” said NAR Chief Economist Lawrence Yun. “Inventory conditions are expected to remain fairly constrained this year, so overall price increases should be well above the historic gain of one-to-two percentage points above the rate of inflation. If home builders can continue to ramp up production, then home price growth is expected to moderate in 2014.” - See more at: http://www.inman.com/2013/05/09/home-prices-post-highest-gain-in-over-7-years/#sthash.KboECc0L.dpuf
Great news right! Not so fast…
Some dark shadows are brewing on the real estate horizon. Looking at who is leading the recovery, the rate at which the market is recovering, and the future governmental programs all paint a picture a little different than the major headlines.
This market boom is being spearheaded by investors. Seeing the low interest rates in conjunction with the depressed home prices, investors are able to move with more assurance and speed then the average home buyer. Once prices rise, many of these investors will pull back—leaving a hole in the market again.
"These days, I worry more about the economy hurting housing than housing hurting the economy," said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a Washington D.C.-based think tank. Employment is intimately integrated with the housing market and hiring has slowed since March—the weakest growth since last June. Discouraged workers are increasingly leaving the workforce hinting that the housing market recovery will being slowing more and more. Once the jobs market improves, there will be a direct surge in the housing market once more.
Governmental cuts, $85 billion, will be hitting their peak this summer. The cuts will hit the gut of the American workforce since workers comp, military spending, the expiration of payroll tax breaks, and other pieces will all contribute to overall loss of income—impacting the spending capabilities of many families.
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