Where Will You Be Living in 10 Years?

This is an excellent time for homeowners (or those desiring to become homeowners) to assess what the next 10 years will present and how these changes will affect their decisions.

With housing prices low and housing interest rates running slightly above the level of inflation, housing looks very attractive.  However, the media continues to report housing prices haven’t stabilized and this adds concern to the evaluation.

According to the May 4, 2012 “Kiplinger Letter” the next twelve years will bring slower annual growth, sustained unemployment is the 6% range and the inflation rate doubling from the current 2% to 4%
“or a bit more by 2020”.

This will mean higher mortgage interest rates and increased costs for new home construction.

Kiplinger projects that homeownership will settle around 66% for American Families.  This is down from the high of 69% in 2006 but up from the current level of approximately 64%.  They further state that home values should rise about 1% above the inflation rate during this period.

Current average selling prices are affected by “distressed” property sales (short sales and foreclosures).  When you look at non-distressed sales, the values seemed to have stabilized and in many segments of the market, competition for quality properties are firming prices up.

It may not be the right time for everyone to buy, but you have to live somewhere and the costs is always there.  Most all of America (including real estate brokers) got caught up in the hype of rapidly rising home prices.  Returning to the concept of having a home, paying yourself to build equity over a long term hold rather than renting makes sense if you don’t move every 4-5 years.

With higher prices coming our way, a review of your home ownership position with a trusted real estate advisor is a good idea for most Americans.