A solid foundation of knowledge can be built that will help you better understand what you need to know about real estate. When you present yourself with this knowledge you will be ensuring that you are not making one of those rookie mistakes that could spell the end of your career in real estate as well as your credit rating. Below we are going to explore one facet of this knowledge, real estate prices. We hope that you will walk away with a better understanding of how real estate prices affect investing.
For the property prices to go up you firstly need plenty of eager buyers. One implication of the fact that house loans have to be made when anyone wants to buy property, is that there will be many buyers who will go rather for houses with interesting mortgage products that includes low nominal rates. In accordance with the same source, a decrease of just 1% in the nominal interest rate is equal to 1/2% to 1% of property prices increase after 1 year. Buyers are also extremely sensitive to any sort of drop in the nominal interest rate and as a result property prices settle.
Appearance and the present condition of the property also play an important role in determining its price. Buyers prefer a property which does not require a lot of work from their side before they can start using it. Curbside appeal, or your first impression looking at the faade of the house, the condition of the neighboring house, vegetation, all are vital factors determining the cost of a property. A building which is newly painted, has a lot of air and light, which “feels” cozy, has working plumbing in a good condition, is somewhat furnished, has good strong flooring and faultless walls (as walls with cracks can indicate faulty foundations or plumbing systems), has a favorable ventilation system, good security etc, the prices are bound to be a lot higher than they would be if it was otherwise.
Part of the reason for the current foreclosure situation is that people were buying homes they just couldn’t afford. This was due in no small part to the fact that home prices were increasing at unprecedented rates, and salaries could in no way keep up with these inflated prices. NAR’s Housing Affordability Index (which measures the relationship between home prices, mortgage interest rates and family income) rose 10.9% in December to its highest level since tracking began in 1970.
When it comes to the real estate market, there are really two prices for every home. The first is called the listing price. The second is the known as the sales price. They are almost always different, and only one really matters. Let’s take a closer look. The listing price is like a political opinion. Everyone has one and it is usually based on some non-factual basis. In real estate, this is known as the wish price. A person selling a home assigns a price to it when they list it online, in the multiple listing service and so on. This price reflects what the homeowner wishes to get for the house based pretty much on their sole desire.
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The current sale price of similar homes will give the realtor the information they are looking for to be able to fairly price your home. The cost of the homes that did not sell could likely be too high for buyers in your area, and that will be taken into consideration by your realtor when the value is placed on your home.
The Las Vegas area has also seen a drastic decline in home prices with the current median home price being $138,500, down from $317,400 in. Currently, Orlando, Fl also sits in the storm of declining home prices. Orlando has seen a 26% decrease in home prices, along with many other national tourist attraction cities. These cities usually have higher home sales due the sale of vacation properties and second homes.
Home sales have however rose 11.4% across the nation in the third quarter which accounts for 5.3 million housing units. Lawrence Yun, the chief economist for the NAR, attributes the increase in home sales to the very attractive federal tax credit. The extension of the tax credit along with other changes that benefit previous home owners and home owners in higher income brackets, may have also contributed to the increase in home sales. Yun also believe that the tax credit will continue to offset the rapid amount of forecloses on the market but enticing buyers.
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