Americans Showing Confidence in the Housing Market Again
With an increase in home prices and a decrease in the foreclosure rate as of late, Americans are beginning to show a confidence in the housing market once again. As a matter of fact, 79 percent of Americans say owning a home is a vital part of the American dream. This number hits a three-year high according to a CNBC-All-America Economic Survey. These people believe owning a home is a better investment than owning stocks.
The desire to buy a home is growing among Americans. Even first-time homebuyers are putting their trust into the market and buying at an incredible rate. As sales of new and existing homes bounce around from month to month, people still have a confidence that hasn’t been seen for several years.
The rise in home purchases is due in part to the first-time homebuyer. Although slow to recover from the housing market crash, first-time homebuyers are making their way back and in February made up a third of the homebuyers. It may not be the norm of 40 percent or more, but the number of first-time homebuyers is on the rise, hitting a four-year high in the same month.
Interestingly, although first-time homebuyers are excited about purchasing a home, current homeowners are not. Investors, on the other hand, have jumped into the real estate market with both feet and are the biggest competition for homebuyers. Because they typically deal in all cash, this drives prices higher, which is good news for sellers. In Phoenix, one of the areas hardest hit by the housing crash, there has been a 23 percent jump in housing prices just since January 2013.
As encouraging as this all sounds, the fact of the matter is there is 5.1 million property owners still delinquent on their mortgages or the foreclosure process has already begun. The housing crash still weighs heavily on these distressed homes, and the number will continue to rise as banks rush to foreclose on properties delayed by processing fraud in the last several years. What this means for homebuyers is housing prices may drop once again, and for investors who mainly use the properties they buy as rentals, they will continue to reap the benefits.
As Americans continue to gain confidence in the housing market and lean more toward home ownership rather than renting, investors may have to rethink their strategies. Renting the homes they picked up so cheaply may prove to be difficult as more renters take the first-time homebuyer leap and transition into homeowners.
What’s to come of the housing market this year is anybody’s guess. All signs point to continued improvement where sellers actually get what their houses are worth and buyers get more house for their money. 2013 will prove to be an exciting year as the American economy continues to recover, bringing the housing market with it.