Everyone always asks where are prices headed in the new year? Buyers and sellers read the headlines and hear prices are up 13.03% over last year, but what does that mean? Are all prices up 13%? Is that the average price or the median price? If prices are going up, how much more will my home be worth next year?
We’ll attempt to answer some of these questions. Prices vary by month. It is true the median price of a home is 13.03% higher this October ($157,000) vs. last October ($138,900)
As you can see by the attached graph home prices maxed out this year around April. The average sales prices maxed out at $292,201 in April while the median sale price maxed out in June at $185,000, although April was a close second at $182,000. Prices have gone down regularly since April, so some might conclude that prices are actually falling, not rising.
This isn’t true either. If you go back and look at 2012 the same pricing phenomenon was reached with prices maxing out in May before falling a bit later in the year. The difference is prices leveled out in the 3rd and 4th quarters of 2012. We have seen a leveling out in 2013 until the dip in October prices. We’ll be watching November and December data when it’s released to see which trend evolves.
We don’t get too wrapped up in any one month’s data as certain sales can slip into the next month which can skew one month’s data up or down.
For the past few years season has dictated where prices will go for the following year. By season I mean sales occurring in Jan-April and closing into May. We do have a bit more inventory to sell this year, and our inventory prices are higher than they were last year, so logic would dictate as long as the market responds with sales at those prices we should have a pretty good season.
Some economists are expressing concerns over interest rates and how an anticipated rise next year could affect real estate purchases. A 1% increase in interest rates decreases buyer’s buying power by about 9%. Flood insurance has been another concern for Realtors. As of now, flood insurance rates are going up when you buy certain properties. Congress may delay the rate hikes for up to 4 years but all proposals are stalled at this time, so rate hikes are in effect. We’re talking about some significant hikes, and this could weigh on real estate prices for affected homes.
All in all we’re confident and hopeful heading into 2014. There are some wild cards in the forecast as there is every year. The bottom line is a recovering economy can cure an awful lot of wild cards, so we’ll continue to track the economy, interest rates, flood insurance, health care costs, and any other issues that impact buyers purchasing ability and jobs.
If you’d like to search the MLS, visit www.TopAgent.com and find your place in paradise today before interest rates go up. Good luck and Happy House Hunting!
If you’d like to search the market as either a buyer or seller, visit www.Topagent.com If you need extra help we’re always available to talk to you and help you make better decisions. Our phone number is 239-489-4042 Good luck and Happy House Hunting!
To search the MLS for properties go to www.TopAgent.com or give us a call at 239-489-4042 Good luck and Happy House Hunting!!!
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