Home Prices in the US continutes to rise
At what might be the sign of a speedy recovery, home prices in the country’s largest metropolitan has reported an increase of 9.3 percent over the year. This is the largest growth since May of 2006 before the real estate bubble burst.
The report from Standard & Poor/Case-Shiller Index shows the increase started at 8.1 percent in January, further giving proof to the quick pace of recovery for the country’s housing market.
This increase can be credited to the increase in supply across the country. After the housing burst and immediately after evidence of recovery, many homeowners are holding on to their properties in the hopes of reaching more gains in the future. This, combined with the number of Americans still behind their mortgages, created a tight condition in the country’s residential real estate market.
Due to the limited number of available homes in the market, it is only natural for prices to pick up. Furthermore, despite intentions to sell their homes, experts believe that the shortage of properties must still be met with fast paced homebuilding. It takes about seven months to build a home, making it harder to see when the supply will finally meet with the increasing demand for residential properties.
Another issue is the somewhat familiar symptoms of housing collapse. Many of the areas experiencing growth in the housing sector are not supported by a strong foundation of high employment and wages. This bothers many experts for its bubble-like condition.
Still, it cannot be denied that the increase in home values is a sign of economic growth. According to Patrick Newport of HIS Global Insight, this sudden spike in values may cause a domino effect. Many people may feel wealthier with increased home prices thereby causing them to likely spend more. And with more buyers visiting these markets in droves, the equally increase number of developers may earn more incentives in homebuilding that will likely make up for the lack of current supply of residential real estate properties.