Homesellers should consider the pricing resurgence as a temporary opportunity, and not think that we’re back on track and expect big gains every year. By looking at this graph, it appears that the recent gains are almost entirely attributed to lower mortgage rates.
Here is a look at how the change in rates have impacted this house value index. There was an inflection point in early 2012 where the combination of dropping rates and low home prices reached its ideal mix, and now values have bounced back some to compensate.
But if the rates dropping into the low 3s are what caused the turn-around, then there won’t be much propulsion to keep it going from here except Shiller’s idea of “animal spirits”:
(click on image to enlarge)
Americans are payment shoppers, and don’t mind paying a higher sales price as long as the payment stays about the same. This alone should keep a throttle on rising prices.