When Will Home Prices Rise?

November 2, 2009 No Comments »

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There’s been a ton of talk about home price declines over the past couple years, but now a bit of optimism is starting to shine through, at least in select markets.

So, when will home prices rise, and why?  SmartMoney.com wrote a post on signs to look for that should increase the value of your home.

It’s not easy to time the market, but looking out for these positive signs could help you buy (or sell) at a better time.

Fewer Foreclosures

When foreclosure filings and related sales dip, there will be less of a drag on home prices in a given area.

Foreclosures have fallen from their record highs, but that’s only after a heap of government intervention and taxpayer dollars, so we won’t know if things have really improved for a while.

Falling Inventory

When housing inventory falls, home prices will rise; it’s basic supply and demand.

One of the major problems tied to the current housing bust was an excessive supply of new homes, and demand just couldn’t keep up.

That’s why you’ll see entire neighborhoods in fringe areas around the country that now look like foreclosure ghost towns.

List-to-Sale Price Ratios

When the listing price of a home and the selling price are more aligned, it’s a good sign that home prices are rising in the area.

Nationally, homes are currently selling at a 5-10% discount below their asking price; keep an eye on this metric and you may be able to get a head start over other buyers.

Lower Unemployment

Unemployment (and underemployment) has been on the rise for some time now, and with that comes an inability to pay the mortgage.

It also means fewer buyers in the housing market, deflating home values in the process.

Income Levels

Conversely, when income levels rise, home prices rise.

If the median household income of a certain neighborhood rises, there’s a good chance home prices will move higher as well.

More borrowers will be able to make mortgage payments and maintain and/or even improve their homes, lifting area home prices.


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