Oct 05

Reduce Buyer Panic Over Rising Home Prices

Reduce Buyer Panic Over Rising Home Prices

 

Reduce Buyer Panic Over Rising Home Prices

Reduce Buyer Panic Over Rising Home Prices

 

With several recent reports showing a sizeable jump in housing prices — anywhere from 5 percent to 6 percent in annual gains — you may be encountering more buyers who are worried that they’ll soon be unable to afford a home.

The National Association of REALTORS® recently reported that the median existing-home price nationally in August rose 5.1 percent from the same time a year prior; the Case-Shiller Home Price Index in July showed prices rising 5.1 percent over a three-month period compared to a year earlier; and the Federal Housing Finance Agency’s purchase-only index showed home values rising 5.8 percent. As if that wasn’t enough to rattle budget-conscious buyers, CoreLogic released a report Tuesday showing annual home-price gains at 6.2 percent.

“Housing values continue to rise briskly on stronger fundamental and investor-fueled demand, as well as lack of adequate supply,” says Anand Nallathambi, president and CEO of CoreLogic. “This continued price appreciation is contributing to a growing affordability crisis in many markets around the country.”

CoreLogic’s report showed that the states with the biggest price gains were Washington (+10.2 percent), Oregon (+10.3 percent), Colorado (+9.1 percent), and Florida (+7.6 percent).

However, you need to reassure your buyers that these reports don’t give the complete picture and shouldn’t be considered evidence of their ability — or lack thereof — to purchase, says realtor.com® Chief Economist Jonathan Smoke. After all, “given the unique nature of homes and how prices are determined through negotiations between buyers and sellers, reports on home prices are, at best, background context,” he notes.

Realtor.com® recently highlighted the differences in how the indexes compute their findings. The article can help you address any concerns from your clients on how those numbers were calculated and what they really mean.

Source: “Home Prices Heat Up: Crisis and Opportunity,” CNBC (Oct. 4, 2016) and “Watching U.S. Home Price Trends? They Probably Don’t Apply to You,” realtor.com® (Sept. 29, 2016)

 

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