Whether it be home sales, housing prices or mortgage interest rates, the United States real estate market is experiencing one of its most prosperous years in 2013. An optimal environment for real estate investment developed into steady and stable foundation for housing industry growth.
According to National Association of Realtors data, July 2013 experienced a phenomenal 17.2% year-over-year increase in the annual pace of home sales compared to July of 2012. Accordingly, the United States is on pace for the best year in residential home sales since the housing boom occurred in 2006.
The yellow trend line in the graphic above shows the long-term average rate of national home value appreciation at 4% over the past 25 years. Although the average year-to-date median price for 2013 is significantly higher than where it was in 2012, values are still not rising fast enough to keep up with the average rate of appreciation. The 2013 median price of $193,000 is still 20% (or $48,000) lower than where it should be at $241,000, where housing values would be back in line with this historical 4% standard. It is reasonable to assume home values still have significantly more recovering to do to catch up with this trend.
The United States median home price has increased an amazing 25.1% year-to-date though July 2013. This trend also culminated 17 consecutive months of year-over-year price increases. This level of continuous monthly appreciation has not occurred since the housing boom years of 2005 & 2006.
The graph above illustrates the historic average interest rate for 30 year fixed rate mortgages according to Freddie Mac data. An average interest rate of 8.68% over the past 40 years truly puts our current mortgage interest rates into proper perspective.
These steady and positive trends that have developed throughout the year 2013 suggest more of the same to spill over into 2014 as well. Yet only time will tell how long housing prices and interest rates will remain so attractive.
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& THE REAL ESTATE WORD