The New Normal It appears investors have finally had their fill. In many housing markets, sales volume and price appreciation have been driven by investors. Their activity was reflected in a high percentage of all-cash transactions. The number of these transactions has dropped noticeably over the past few months, particularly in popular investment markets like Las Vegas and Phoenix. We will likely see a continued decline in investor activity going forward. This means price appreciation growth will continue to slow. Weve mentioned in recent months that the days of double-digit year-over-year price appreciation are nearly over. Investors were a major contributor to price appreciation; their leaving the market will surely impact prices. This isnt bad news. Stability is an important variable in a healthy market. When expectations are calibrated to how the housing market has historically operated, more people will be willing to buy and sell a home. The market in total will become more fluid – buying, selling, and financing will become an easier and more predictable process. So embrace slower price growth, because it ensures a more stable, more profitable market in the long term. More important, it instills less speculation and a higher degree of certainty, which is what we all want when we attempt to accurately gauge the outcome of a major purchase like a home.
Posted on: Tue, 15 Oct 2013 21:13:35 +0000
Trending Topics
Recently Viewed Topics
© 2015