Posted by Margaret Szerlip October 26, 2014 Newton, MA.
I am asked all the time where I think home prices are headed, what about interest rates. I usually respond that if I knew for sure I would be a very rich woman. But I do feel good about the current housing market here in the western suburbs of Boston. Inventory remains very low, prices are rising but not at the frenzied pace of last spring. Interest rates are dropping. Jumbo loans under 4% again! 7/1 Arms are under 3%! Good stuff — For the first time in 2 years I also see some real movement in the over 3 million dollar market. I know most of you don’t care about what happens in the over 3 million dollar market, but I believe it is an important indicator of the overall health of the real estate market. For the last two years we have been in a trickle up market. The 500K houses pushed the 750K and they in turn pushed the 1M houses. For some reason the push up never really got past the 1.5 million price point. A trickle down real estate market is more broad and sustainable. What happened last fall and spring in the under 1 million dollar price point was scary. Houses seemed to be selling 20% higher than 2 years prior while houses over 2 million were sitting on the market. It was very difficult for contentious brokers to advise their buyer clients. The truth is you can’t really under price a house because the market will raise it to where it should be. This fact is indisputable –over pricing has more serious consequences to the seller. I told my buyer clients that I really couldn’t comp a house to a certain price, that if they really wanted a house they had to pick the price they were willing to pay, but that number was emotional. One house I listed for $899K had 9 offers and went 180,00 over asking!
So, I am optimistic about the housing market. The stock market is taking a hit and when people pull their money out of the market they have to put it somewhere. Many buy a more expensive home. What I would really like to see is more people buying beautiful older homes and not just new or like new. Remember, in 10 years your house is neither new or charmingly old.
When looking at future housing values, Home Price Expectation Survey provides a fair assessment. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number. Here is what the experts projected in the latest survey:
- Home values will appreciate by 4% in 2015.
- The cumulative appreciation will be 19.5% by 2018.
- Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 11.2% by 2018.
Now is the time to buy or sell a home.