With all the economic uncertainty it isn’t surprising the housing market has been unpredictable the past few months. Last spring when it seemed prices were rising, realtors were expecting the inventory to take a jump. Instead people opted to stay put unless there was a better reason to sell than the modest price lift.
Since then the market has been no more predictable. It seems each ups are matched by downs in unequal proportions. This is holding true in the U.K. as well as the U.S. Even the experts can’t agree whether housing prices overall are rising or declining.
On one side, surveyors are pessimistic about pricing while lenders are hesitant to approve new mortgages. Consumers can’t seem to sustain confidence beyond the latest headline and businesses have the cash to hire but are delaying because they don’t know how or if changes in the law or in policy will impact their earnings, slowing home sales further.
On the other side, it seems like consumer confidence is growing as is the confidence in home sales even as home prices sink. Lately, though, sellers have begun asking some of the highest prices seen in the past 4 to 5 years. With lower mortgage rates available and a lower than expected inventory, the increased prices may take hold.
Some of the obstacles for a better housing market include:
- Lenders refusing interest-only mortgages.
- Austerity measures in various countries are still hitting banks.
- Stalemates between the prices sellers are asking and the prices buyers are willing to pay.
As ever, the best advice about whether or not to buy a home is to determine how long you intend to stay in it. The days of flipping homes to make a profit are done for. If you’re only interested in relatively short-term shelter, buying is probably not for you. And the time it takes to get your return on investment is longer than it ever was, provided that the house you buy or own doesn’t lose value rather than gain it.
Cautiously optimistic may be the byword today on where the housing market is headed. Still struggling to regain balance in the aftershock of the financial and banking crash, there is some light at the end of the tunnel. It just seems to be so easily eclipsed right how based on nothing more than media headlines.
Over time, though, the housing market will likely recover, possibly even to its former glory, especially since people seem content to repeat the mistakes of history. After all, this same problem occurred in the seventies and the nineties. It would not be surprising to see it happen again in a decade or so.
* Image courtesy of StockFreeImages.com [Photoroller]
