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I believe we are at a turning point in the real estate market. We are successfully transitioning from a recovery process to an expansion. The number of homes being sold has gone up, and so has appreciation. We usually like to see an appreciation rate of around 3.5%, but for 2016 we are projecting a 7% increase.
Some people might get nervous about this number, but you shouldn’t. There aren’t a bunch of crazy loans being handed out, or people buying homes they can’t afford. It’s simply a matter of supply and demand. There are not enough homes for sale on the market to meet the increased buyer demand from lowered interest rates.
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We are in expansion mode.
”From 2001 to 2007, a homeowner stayed in their home for an average of right around six years before selling. In 2007, we started to see that number increase. It peaked at 10 years in 2014. However, since last year, we’ve been seeing that number drop again. A lot of people had stayed in their homes longer because their value had dropped too much, they had too many job insecurities, or didn’t feel secure enough with the real estate market.
I think over the next 18 months, you’re going to start to see the supply match that demand. We are projecting to see the mean appreciation decrease back to normal levels as well.
