Home Values Hit Their Highest Level in 12 Years
In July, home values rose by 0.6%, causing home values to be at their highest level in 12 years. According to the Quicken Loans Home Value Index (HVI), values rose in every part of the county in July, with the Northeast seeing the largest increase at 1.34%. Southern homeowners also saw their home values rise, but only by 0.04%.
The big questions on everyone’s minds are – why are home values rising so much, and is another recession on the horizon?
Why Are Home Values Climbing So Fast and So High?
Home value is something that is affected by external forces, just like any other goods or services; it all comes down to supply and demand. Currently, the housing market is experiencing an increase in demand and a decrease in supply. Because of this, with too many buyers and not enough homes to go around (or being built), those homes that are for sale can ask for higher prices. In the end, this in turn boosts the values of the homes located around them.
Mortgage Debt Is Also Rising
Home values aren’t the only numbers rising; so is mortgage debt. According to the New York Federal Reserve Bank’s report on household debt, the mortgage debt in the United States has also reached a record high, exceeding the previous record set in 2008. The last time mortgage debt reached this high was right before the housing market crash, and this has many experts concerned about what the coming months may hold.
Also concerning experts is the fact that one of the main reasons for the rise in mortgage debt is an increase in refinancing. More homeowners are refinancing to take out cash for use for other purposes. This was a trend that also occurred shortly before the housing market crash in 2008. Another reason why mortgage debt is on the rise is due to more banks offering 100% financing packages.
Are the Fears of Another Recession Warranted?
In a recent interview with the Wall Street Journal, Michael Feroli, chief U.S. economist at JPMorgan Chase, said that, “the amount of mortgage debt isn’t necessarily a sign of trouble because incomes have been rising at a rate to support it.” Further supporting Feroli’s claim is the fact that lending standards are stricter now than they were in 2008. Today, lenders closely monitor income and employment stability.
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All our leads are verified and ready for your team to convert. With home values rising, now is the time to convert your clients, before they get priced out of buying a new home. Let RGR Marketing help you succeed.
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