Consumers Underestimate How Quickly Home Values Rise

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Home prices are rising twice as fast as consumers think they are. Lack of awareness could be costing home buyers thousands each year they delay their purchase.

Source: Consumers Underestimate How Quickly Home Values Rise

Another way to look rising home values is positive return on investment

In a modest inflationary environment, increase in home prices is a good thing.  If the price of the home is rising that also means the homeowner is also increasing their purchasing power.  If the homeowners purchasing power is rising so is their return on investment.

Historically, if investments are rising and inflation is tempered, the economy is steaming along nicely.  Everybody has heard the phrase “A rising tide lifts all boats”.  If the economy is steaming along nicely, yes the prices of homes are rising but so are the wages of the marketplace.  So while the existing homeowners are increasing their purchasing power, the buyers who want to enter the market are also gaining financial power.  It really is a double whammy for the agents, the buyers, the sellers, and the lenders.

You must know the needs of your customer

There is real opportunity for agents and lenders if we understand the implications of consumers underestimating the rise of housing prices.  When real estate professionals understand the market trends, we can effectively communicate with our customers.  Effectively communicating the value of the market is crucial to supporting the needs of our customers.  If we do it well, we should be able to support the owners looking to upgrade and the new buyers wanting to enter the market for the first time.  Hence, a rising market can  create opportunities for the entire real estate community, including the new owners.

Product knowledge is crucial

Michael Nelson - AFNSince the election, rates have increased.  When the market changes, products change as well.  For example, with rising interest rates, 15 year fixed mortgages and ARM’s are more attractive.  Naturally, more upfront cash may be required for a 15 year mortgage but that can certainly be a good thing.  A 15 year mortgage is much less expensive than a 30 year.  Conversely, a 7 or 10 year hybrid ARM might make a home affordable that is out of reach, especially when the buyer knows living circumstances will change in the not too distant future. Make sure you have a solid relationship with a lender that has command of all the products.

Michael Nelson - AFNClick on the images for information on ARM’s.

 

 

 

 

Please feel free to call, email, or text to continue the dialogue.  As always Happy House Hunting!

Mike

mnelson@afncorp.com
720.213.6260
@michaelfnelson2
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Michael Nelson - AFN

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