A recent Wall Street Journal article indicated that there were five reasons home prices are rising.
1. Rise in Housing Affordability: Interest rates are ridiculously low. People are jumping in to take advantage of these ultra low rates coupled with still depressed (although rising) housing prices.
2. The Increased Number of Households: It is expected to hit 1 million this year, which in essence is putting a strain on the available inventory. This trend will continue because building has been at historically low levels since 2008. The average number of houses built since stats were being kept each year is well over a million in the United States. Due to our recession, that has dropped in half. What this will mean in the upcoming years is that there will be more demand than inventory, which should allow us to see a healthy recovery.
3. The Rise in Rents: More investors are cashing in on this and more renters are questioning their decision to rent. I have investors now who are willing and able to buy what they choose to in the market due to their enormous piles of cash.
4. Decline of Distressed Properties: It has fallen off during the last year, although by historic standards, it is still high.
5. Inventories of homes for sale are at their lowest level in 50 years. Our market is certainly reflective of that, with multiple offers on properties you wouldn't think would get any offers. Many are riding out the downturn, waiting for prices to return to "normal." Some areas will recover much quicker than others.