New Housing Bubble Woes?

As home sales prices continued to increase in May, some experts are expressing concern over this startling surge. In fact, the National Association of Realtors® has said if home building doesn’t increase by 50-percent, we may have yet another housing bubble.

When home prices increase at a fast rate, if supply doesn’t meet the demand, housing becomes unaffordable.

In May, the median home price increased 8-percent over April, settling in at an average of $208,000. While prices often vary month-to-month, May’s numbers are a startling increase over 2012, weighing in at gains of 15-percent. In fact, this past May marked the 15th month of steady home value gains.

The last 18 months has seen a decrease in the number of foreclosures, due in large part to the 5/1 ARM loans expiring in 2012. In fact, in April only 18-percent of homes sales were considered distressed. More than a year ago, approximately 25-percent of home sales were distressed, so seeing a steady reduction in distressed sales is a positive turnaround.

The Association’s president, Gary Thomas, warns that the differences now are different than the circumstances that surrounded the housing bubble burst in 2007. In fact, the first housing bubble crisis was marked with overbuilding and less stringent loan requirements. Today’s mortgage rates are still near record setting interest lows, which is prompting more sellers to list their houses and more buyers to purchase a home before interest rates increase.

Creating the concerning influx is that homebuyers have increased by 29-percent from last year alone, but the housing supply is down approximately 10-percent. This creates price-fueled and concession-laden bidding wars, putting more sellers in the drivers’ seats.

Today, the nationwide average time on market for a home is 41 days, more than 30 days faster than a year ago. Approximately 50-percent of homes are sold in less than 30 days.

“The Wall Street Journal” is quick to counterattack concerns related to yet another housing bubble brewing. With the last half-decade seeing subdued home construction activity, many homes have been either upside down in their mortgages, involved in short-sales or even foreclosures. While home sales are improving, homebuilders are in a position to greatly benefit.

While it’s more difficult to apply for a mortgage in today’s market, with market rates near all-time lows. Better Than Loans is a hard money lender that offers direct loans for apartment building loans and commercial building loans. As a hard money lender, they offer more convenient loans for builders and real estate investors.

Categories: Hard Money Loans

News from the Blog

  • Hard Money FAQs
    Here are some of the frequently asked questions covering hard money loans or fast loan funding: What is a hard Read More
  • Basics About Finding and Purchasing Distressed Properties
    The real estate industry can prove to be a gold mine. It is fraught with opportunities for the discerning and Read More
  • Developing a Business Through Rental Properties
    With the financial crunch, individuals and families are turning to home or apartment rentals, rather than investing a huge portion Read More
  • A Guide To Becoming a Successful Real Estate Investor
    People see it everywhere – get rich quick schemes that promise money and good fortune. In reality, real estate is Read More