National News – Home Prices Rise Above July 2006 Peak

Estate Agent - "I did have a house at that price but I sold it back in 1978."

By Paul Langrock: U.S. Home prices rose 5.5 %, according to Case-Shiller home price index, eclipsing the housing bubble’s July 2006 peak.
We remember that time vividly. It was October and for the first time in years our listing’s contract did not appraise. The appraiser’s August-September comparable sold properties could not support the contract price. We soon realized we may be on the other side of a peak although we had no idea what was to follow.
This time around we clearly do not see a “bubble”. Unqualified buyers no longer are able to obtain 100% loans (coined Eighty-Twentys: 80% first mortgage with a 20% second). Today, low inventory not high demand is what’s driving prices upward. This is in spite of lending institution’s now high qualifying bar. Yes, mortgage rates are also beginning to rise, however, experience has shown this actually becomes a catalyst pulling people off the sidelines. Potential buyers suddenly rush to purchase before rates go higher. They don’t want to miss these still historically low rates and it is wise to lock them in for a long term investments such as real estate.
Additionally, we envision a sleeping demand source by reason of homeownership being currently at its lowest level in nearly five decades.
Home prices are back and they are continuing to move forward. To paraphrase, “You’ll all need homes.”  And, as our Florida license plate reads, it’s TYM2BUY.

Paul Langrock