Home buying frenzy ending?
Recent sales of homes in my neighborhood in Green Valley have been at record highs for over a year. Some say that low interest rates are responsible. Others view the boom as a function of supply and demand–an overabundance of buyers yearning for warmer climes, and a limited number of homes on the market.
Three years ago, there were usually 400-500 homes for sale in the Green Valley area. Today, there are 182.
It’s probably a combination of both.
What do others say about the current real estate market in the US?
Lured by strong currencies and a booming real estate market, foreign investors are snatching up homes across South Florida.
According to the economists where prices have risen substantially reflect areas where demand has far outpaced supply and are not indicative of a price “bubble,” the economists said.
Economists in the mortgage banking, residential real-estate and home building industries predict rates on 30-year mortgages will rise to around 6.75 percent by the end of the year. Other economists think it could close in on 7 percent. By historical standards, those rates would still be considered good, analysts said.
Martha Holland has sold homes for more than 30 years. She said she’s been through peaks and valleys in the home buying market and this is a peak.
Twin Cities home buyers begin to gain more leverage as the housing market shows signs of cooling.
Home prices have been stabilizing in the Las Vegas real estate market in the last 45 days due to inventories returning to an industry norm, you can look for the second-home markets to thrive during the winter months. This will unfortunately reduce housing inventories here in the Las Vegas Valley, but hopefully not to the low we experienced in the second quarter that drove real estate housing prices in Las Vegas to a record high.
August 22nd, 2005 at 12:08 am
I think you can get a good grasp of the level of speculation in the local real estate market by looking at homes that are purchased and resold, either before they are completed or without ever being occupied by the purchaser. From what I have read, that’s a problem largely in two markets–Miami and Las Vegas. I would not want to buy a home now in either of those markets. But I think Green Valley and Southern Arizona are very different and I’m not much concerned about a drop in values here. Prices well could level off, but I doubt they will drop.
As far as mortgage rates go, they tend to track the 10-year Treasury Bond interest rate which, in spite of forecasts that have been predicting for 2 years now that that rate would rise, has remained between about 3.8% and 4.6%. It is just over 4.2% right now. I don’t think we’ll see it over 5% in the next 12 months although, as an investor in bonds who depends on bond interest for part of my retirement income, I would be delighted if we did. A 5% 10-year T rate would mean 30-year fixed mortgages around 6.5%. I don’t see that being catastrophic, even in those markets where, unlike Green Valley (where you find a lot of cash buyers), it matters a lot. Most experts suggest that the tipping point would be a 30-year fixed rate above 7%.