Industry watchers can set aside doubts about the housing market's strength, as home sales continue to climb despite diminished inventory that's pushing up prices across the country. While rising prices would normally push down demand, it still may be a great time for people to enter the market.
Despite increasing home prices, interest rates remain at historic lows, and buyers who take advantage of these rates can benefit over the long term. With a September interest rate hike looking more likely than ever, American homebuyers need to strike while the iron is hot and snap up homes. Even individuals who fall outside the narrowly defined credit eligibility requirements set down by traditional lenders may find they can get a great deal by working with an alternative lender like Impac Mortgage Corp. Retail.
Prices climb to pre-recession levels
Following the economic downturn, a massive amount of foreclosure activity and general housing market malaise led to a rapid drop in home prices. Now, two different surveys of the current housing market reveal prices have climbed back to about where they were before the recession hit.
"Home prices are at pre-recession levels."
Black Knight Financial Services' new Housing Price Index indicated that homes cost just 6.5 percent less than they did at their previous peak in 2006. The Mortgage Bankers Association analyzed historical price data and came to a similar conclusion regarding the average price nationwide, according to HousingWire. While the average price of housing is back to where it was about a decade ago, the recovery has not been consistent across all parts of the country.
The MBA found that homes in many areas are actually more valuable than they were during their pre-recession peak, while certain metros currently lag behind. That's often the result of regional housing demand, which is the main driver behind the current price increases.
Inventory pushes up prices
At the most basic level, the areas with the extreme price growth are experiencing the change due to low inventory that results in persistent bidding wars for homes. Counterintuitively, these price gains could actually bring an increase in inventory. According to Inman, a real estate news site, low home prices have encouraged people to hold onto their homes rather than sell them. That has driven up prices to the point where people may actually start putting their houses on the market.
That effect could become more pronounced as price gains become more equally spread across the country. If inventory increases, the current rate of growth could last through the end of the year.
"The recent pace can't be sustained, but it points clearly to upside potential," said Chief Economist at Pantheon Macroeconomics, to The New York Times.
Still a good time to buy
People who want to enter the market may still want to purchase a home now despite elevated prices because interest rates remain incredibly low. That's likely to change in September, according to Bankrate, so buyers who want to lock in a low rate now should move quickly. Some analysts already believe that this is happening, and note that there could be an influx of millennial buyers who want to ensure they get the best long-term deal in the next month, according to Realty Today.
Strict lending requirements may make it difficult for many buyers to enter the housing market, but they still have hope. Alternative lenders like Impac Mortgage Corp. Retail offer loan products that allow buyers to qualify based on income or other criteria. The housing market is taking off, and buyers of all types can take part thanks to the efforts of Impac Mortgage Corp. Retail.