Has the Winter Chill Transferred to the Housing Market?

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The weather has been so cold this year, and the industry experts fear that perhaps this chill has been transferred to the housing market. In the past few years, there were so many people who were interested in buying a home. All these individuals are now losing their drive and no longer have plans to invest in the real estate market, at least not for right now.

A reputed real estate professional stated that people are not optimistic about the housing market and many are backing out.

Here are the main reasons that the real estate market is beginning to lose its appeal.

The average home value appreciation is low

A survey shows that the average value a home will appreciate is 3% for the next couple of years. Compared to the current mortgage rate, this is 1.5 points lower. As such, anyone who buys a home will actually have to experience a negative return.

In the period before the housing crisis, the average home appreciation values were 12% on a yearly basis. True, at that time, they were quite excessive. The appreciation values should not be this high, but they should still be higher than the mortgage rates.

Renting is becoming a fashion

Job outlook may have improved, but not considerably. As such, youngsters prefer to rent and have pushed homeownership to the back of their minds for right now. As of now, all these individuals are renting out in areas where homes are more affordable. Only time will tell if they become homeowners in the next few years or when they are about to retire.

The economy does not seem promising

Many Americans are not confident about the country’s outlook, and their confidence values have fallen behind by 30 points. Until this effect mitigates, people will not consider homeownership.

If buyers start disappearing from the market once again, it will probably lead to another housing crash. Seemingly, it may not appear that way but delve deep inside, and the possibility does exist. But there is still one conflicting factor; home prices, though are on the rise, still have not risen enough to lead to another crash.

Let us hope the situation stays this way, and our country does not have to go through another crisis again.

Source: www.finance.yahoo.com

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