Housing Prices Skyrocket, Causing Concern About The Market
The global economic recession we’ve been dealing with since 2008 is due, in large part, to financial funny business related to the housing market. So it’s shocking to many that the housing market in many urban areas is red hot these days.
“U.S. home prices surged 12.1 percent in April from the same period a year ago, the biggest jump since February 2006 and the second straight month of double-digit gains, CoreLogic reported at the start of June,” said CNBC. Some areas, the article says, have seen prices go up “too far, too fast.” Low borrowing rates have driven demand. And that demand is coming from just as many homeowners as speculators and investors, who are purchasing a good deal of the homes. And they’re doing it in cash.
For African Americans and Latinos, the housing bust was particularly rough, with the number of foreclosures high in these communities and homeownership rates now at a low point. With these speculators and investors snapping up properties, it’s difficult for all first-time homeowners to get a foot in the door (literally). “The irony of this foreclosure crisis, which was caused by Wall Street’s irresponsible behavior, is that it created the massive supply in homes that those very same financial institutions are now profiting from at a record pace,” writes ColorLines. First-time homeownership in the US has fallen 25 percent, the article says.
Despite the obstacles, for many African Americans, homeownership is a goal. A Better Homes & Gardens poll found that 74 percent of 400 African Americans polled thought a future generation would own a home at a younger age than they did.
To help with that in one state, Florida Community Bank has set aside $5,000 for a program in conjunction with Consolidated Credit Counseling Services, a national credit counseling organization, and the NAACP’s Ft. Lauderdale/Broward Branch to help educate prospective homeowners to navigate the process.
“There’s a varied inventory of houses that are foreclosed, but there are more investors in the market,” Maria Gaitan, housing and business development manager with Consolidated Credit told us on a call recently. “We’ve heard of people looking for a home for up to a year because people come in with better offers in cash.” The program we discussed is only available in Florida, but is open to all potential first-time buyers. The organization recently held a six-hour workshop to help buyers in South Florida.
Forbes says the “bubble” won’t last as inventory will dry up, the types of homes available will change (the number of houses on the low-end of pricing has gone down while higher-priced homes have gone up), and mortgage rates rise. In short, the housing market is still in flux. And for many, that means it will take time to sort out what will work for their needs and budget. If you’re saving for a home or looking to buy one, the key may be patience.