Home Prices Are Climbing Faster and Faster, but This Is Not a Bubble
Here is a story from http://www.realtor.com/ by By: that compares this market with the 2005 bubble market.
The key in this story is the available inventory of homes being less than 5 months.
” An equilibrium level of supply on the market is considered to be six to
seven months; supply has been under five months since December. Looking
at every quarter since 1988, when supply was under five months, prices
rose 8% year over year on average. When supply was in the equilibrium
range, prices went up only 4% on average.”
I was looking at some properties in Aurora Ohio this weekend and noticed a ton of new homes being built in that area. The homes ranged from $150,000 and up. We also stumbled on a lake that was called Aurora Pond believe it or not. It was an very nice area were homes ran from $200,000-$750,000.
The only obstacle to another robust market is lending. This story does not challenge that but I know from being on the streets that first time home buyers need to get back into the home buying market. To get them back they need some lending programs to help boost young adults to purchasing the very affordable homes currently on the market.
Lastly this story does point out the Rent ratios being what they were in the mid 1990’s.
“Likewise, relative to rents or incomes, median home prices are not “unhinged” from long-term averages.
The price-to-rent ratio is similar to the rate in the mid-1990s. It was
35% higher in 2005. The price-to-income ratio is now where it was in
2001, and it was about 30% higher in 2005.”
All this information tells us is that we should be in the market know before the market really takes off. Brett Young Coldwell Banker
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