Home Sales up, Prices Flat.... And????

We see articles out there over & over that show sales figures are up, but prices are steady, down very little or up very little.  These authors make this sound like a bad thing.  However, I would say anyone who understands the way a market works will realize that sales must go up before before prices will.  If people are sitting back waiting for the prices to rise back up to 2005 levels, pack a bag because that wait will be a long one.

In 2005 when the Real Estate market was at it's peak there was a nice set of circumstances that allowed home prices to be inflated way beyond actual values.  Between government policy, naive investors and scam artists the only requirement to get a home loan was a pulse.  Literally ANYONE could get approved for a home loan between 2004 - 2005.  If you couldn't qualify on credit or income level, then you could find another lender that would do a "stated income" loan.  You could actually go in and say you made $500,000 per year with no proof and get an approval based on that income.

When everyone can buy something the price will go up due to competition.  It will be along time before the lending industry will be willing to give money to anyone who asks, and therefore the buyer pool is going to be much smaller.  With less buyers the prices aren't going to spike anytime soon, so the fact that prices are rising at all should be seen as great news.

For two years we saw home sales staying flat or falling slightly year over year & month over month.  New home starts were falling like a rock and prices continued to sag.  With the last three months showing strong gains in sales on a national level and home starts up in many states, the recovery has begun.  People in general have realized that American real estate will not always appreciate at insane levels.  In fact if people had looked at statistics over time they'd realize that historically home prices fluctuate up and down.  

Even with home prices moving up and down over a long period time they will typically appreciate at a greater rate than inflation.  That being said it is still important for home buyers to realize you are buying a place to live & invest in a community.  If you are expecting to purchase a home and use it like an ATM you'll forever be disappointed.  Find a home in an area you enjoy, invest in the home and take pride in your neighborhood.  This is what home ownership is supposed to be all about.  

Now is a great time to buy, good selection, low prices & amazing rates.  Go take advantage of it!