What does a normal real estate trend look like? What does normal even mean these days?
Normal is the average, typical state or condition, the usual the expected. Hate to point out the tension in the room but…. Just a guess but if something feels one way for 15 years, that becomes the ‘new’ normal, but in systems with years of being – their typical state or condition has a much greater scope than even our lives, like the earth, like the economy.
For 15 Years The Real Estate Market Has Experienced Truly Abnormal Trends
In an article in Market Watch by Daniel Goldstein, personal finance reporter, there is some ho-hum news.
- Home prices are predicted to rise by 3% nationally in 2016, compared to the 6% nationally in 2015.
- Rent prices are expected to rise in 2015. Which will encourage people to buy, although it’s hard to save for a down payment if your rent just went up.
- 1% increase Mortgage interest rates – expected to be 4.88% compared to the 3.86% at the end of 2015.
- 15% of mortgages are underwater, that’s 7.9 million people, which is better than the 31% in 2012.
- As more people stay in their homes more money is expected to be spent on home improvements this year.
- New types of mortgage products. Maybe some that do not require as much down payment, or a steady, track-able income. Self employment has been a barrier to getting a home mortgage. Another change to restrictions would be to count boarders or renters for multi-generational home, or houses with roommates.
Ho-hum is what a normal market or a real state market or a sock market does. Inflation slowly raises prices and other things, like home investment, becomes less appealing and the market will correct its course with proper stabilization from the Federal Reserve System, banks themselves, wages employers pay, etc….
The economy is like an organism. It lives and changes, grows and reinvents itself with the demands of growing, earning and living people. The earth itself is an organism that shifts dirt and water over its surface and burns from the inside, and the layers of atmosphere that coordinate to the organisms living needs, as well as affecting consequences of organisms actions against the well-being of the earth.
The economy is going to live and we are limping a little and tired from hustling after that last housing bust. And we are thinking about what our desires do to the market and what that can do the earth. Millennials are getting ready to buy because the Eco-friendly, minimalist yet materialistic homes are working up from the dream – to the manufacturing phase.
The switch to more normal conditions is simple. There has been a shift from containing the risk to growing the market. Perhaps a shift to optimism, versus pessimism? It couldn’t hurt.