We have had a very interesting Spring. Nationwide, home values have generally appreciated nicely over the last year. Interest rates have increased a bit but are still near historic lows. Are we heading towards a housing bubble? Experts (including Jim Roy, Owner of Luxmanor Real Estate) think not. Why? Lenders are still not willing to lend to those most likely to default. This is very different from the lending market of 2000-2005. We saw so much demand and risky speculation that, few could argue, resulted in anything less than a (temporary) collapse in home values for most of America. Ideally politicians and lenders have learned their lessons and we’ll avoid the mistakes of a decade ago.
In many areas that have seen double digit home value increases in the last year, those homes are still below their highs. The DC Metro area is up 10% for the median price and days on market have dropped 41.51% to just 31 days. The number of transactions are up as well (12.26%). These stats are for June 2013 compared to June 2012.
While many people have made some quick money buying/flipping homes, the safest way to think about Real Estate is that it’s a marathon. Anyone buying should be ready to be in it for the long run. Historically, it’s a very safe investment over long periods of time. For most of us real estate is something even more important: our home.
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