If you’re someone who likes to keep abreast with economics you’ve probably heard that pricing increases are starting to slow down. Good thing, too.
What would happen if we had consistent price gains like we have seen the past year? Well, if we factor in that interest rates only have one place to go, and that’s up, we can see how this may be a problem. With rates artificially low we are seeing more people with the ability to afford. We can see that if price gains get too high at these artificially low interest rates, we will likely see a market correction once rates go up. Not because demand will be less, but the ability to purchase and afford will be less.
Housing experts are reporting that gains are likely to slow down, and that’s exactly what we are seeing. “Sellers used to seeing huge price gains month after month may feel some whiplash as that slows down,” said Stan Humphries, chief economist for sales tracker Zillow.
Still, we are a long way from 2006. We are still nearly 20% below peak levels reached that year on a national basis.