Home prices in the US increased during the first quarter of 2013. This was the fastest surge in prices in almost seven years. The housing market revival has caused major debates within the Federal Reserve. Their current debates:
- How far their easy-money policies should be pushed
- Where to go with their bond-buying program, with it’s $85 billion-a-month budget
According to analysts, the bond-buying program is responsible for helping to keep the US mortgage interest rates at such historical lows. It has also helped with boosting the prices of assets, as well as stimulating spending and hiring.
Officials within the federal government have been debating about when it will be appropriate to start winding the program down. They’re concerned that our economy may not be ready to survive without the bond-buying. They fear that the current signs of recovery may be temporary, just like in the past.
On Tuesday, these reports became major factors that drove the financial markets. The strong data encouraged stock investors, sending the industrial average of Dow Jones to new heights. The 10-year Treasury note yields increased to their highest peak in about 13 months, to 2.132%.
This data shows that our economy as a whole is headed in the right direction. But, according to Scott Buchta of Brean Capital LLC, it’s probably not enough for the federal government to scale back on bond buying.
Standard & Poor’s/Case-Shiller also released a national index this past Tuesday. It shows a 10.2% increase in home prices between March 2012 and March 2013. This reflects the highest annual gain since 2006, when home prices began falling.
Also on Tuesday, 30-year fixed rate mortgages inched up to 3.9%. In the meantime, home prices are still 28% lower than they were during the market peak in 2006. Between the low prices and record-low interest rates, homes in the US continue to remain affordable.
Americans consider houses to be our biggest financial assets. So, analysts believe that increasing home prices can really help to boost consumer confidence. These gains will also stop many homeowners from being distressed by being underwater. Increasing prices mean more padding between what they owe on their homes and how much they’re currently worth.
Currently, there are still not enough homes on the market to meet demands. This is intensifying buyer urgency even more. Homebuilders have taken advantage of this situation by building new homes across the US. Eventually, as the supply increases, so will home prices.
As demand continues to outnumber supply, real estate agents have been contacting potential sellers about intense demand in their local communities. They’re becoming more and more aggressive when it comes to keeping homeowners informed about their local market conditions.
Ms. Lee, a condo owner, had been renting out her property to tenants for four years. She listed the unit for sale n April. Within just one week, she received six different offers. When it closed escrow, it went for just above her asking price of $275,000.
Her real estate agent, Mr. Bryan, says he’s sent out 200 postcards to local condo owners. His goal was to flushed out potential sellers. His postcards had one message on the front in big, bold letters, “Got Belltown Condo?”