It has been a crazy time for the housing market these last few years, from prices that were inflated to well beyond their value, to a severe drop where many homes were not worth much at all. After a slow recovery period from the bottom, the housing market is starting to look more normal now.
The latest prediction is that the home prices will increase an average of 3.3 percent each year for the next five years. This is well below the average between 1998 and 2006, when prices increased by about 5 percent each year. Following the housing crash however, prices began to fall and dropped by 30.5 percent up until September 2012.
Getting Back to Normal
After a long period of uncertainty, it’s hard for anyone to know what normal really looks like. However, beginning the end of 2011, prices began to stabilize, and gave hope to homeowners who were planning to sell. From September 2011 to September 2012, house prices increased 3.6 percent. It was during this time that most of the markets being tracked saw an increase in price, where before that it was just 12.5 percent of the markets.
Hope for the Future
According to reports, it is expected that most metropolitan areas that are being tracked will see rising home prices. Medford, Ore., is expected to be the leader with a 9.7 percent increase predicted for next year. However, other cities are still digging their way out of the housing market crisis, with cities like Miami expected to show a loss next year. The reason for this is that foreclosures are expected to continue, which will affect housing prices in that area.
Experts predict that housing price increases will be similar to those seen in 1997, just before the housing market explosion. Other cities that are expected to fare well in the next 12 months include Santa Fe, N.M., with an increase of 8.1 percent; Billings, Mont., with an increase of 5.5 percent; and Syracuse, N.Y., with an increase of 5 percent.
Cities that will continue to show a loss – though not as great as Miami – include Merced, Calif., at 8.3 percent and Riverside, Calif., at 8.6 percent. Warren, Mich., is expected to be second to Miami, with a loss of 9 percent. This demonstrates the fact that while the country overall is continuing to improve, some areas still have a long way to go.
However, the numbers are positive for homeowners and businesses involved in real estate, as cities like Phoenix and Detroit have shown remarkable gains. This is a prime time for anyone looking to buy to get involved in the market. Prices are still extremely affordable, but won’t stay that way forever. In addition, mortgage rates are at historic lows. This combination creates a buyer’s market that will provide a positive impact on many areas of the economy.