Last week the Wall Street Journal published an article which talks about the 5 reasons home prices have been rising. Click here for the article.
1) Housing affordability is attractive: With interest rates at historically low levels and house prices significantly down the monthly payment of a mortgage is looking very appealing to buyers. In fact, the monthly payment on a median priced home in Santa Barbara is now less than half of what it was in 2005!
2) Household formation is revving up: Economists from Bank of America indicate that the U.S. is on track to add 1 million new households this year, up from 630,000 last year.
3) Rents are rising: This has prompted more investors to purchase properties to rent out and has more recently given buyers a reason to get off the fence.
4) Share of distress sales are down: Mortgage delinquencies peaked 2 1/2 years ago. Banks have stepped up foreclosure alternatives like short sales. In Santa Barbara there are currently 5 times as many short sales in escrow than foreclosures.
5) Inventories of homes for sale have plunged: Inventories of existing homes for sale are near a 10-year low nationally and down by one third over the past 2 years. Santa Barbara’s housing inventory has dropped 27% over just the past year.
The sales numbers for 2012 are pointing to the end of 2011 as the most recent bottoming of the real estate cycle for Santa Barbara. Even if the bottom has past it’s a great time to buy given the current affordability and confidence of rising prices.
I appreciate your inquiries and the opportunity to assist you with your goals in these exciting times for the real estate market.