CoreLogic reported today that nationally, home prices rose 0.3% in December and 4% for the year. Four percent appreciation is amazing! Just think about this for a minute: In Tucson, Arizona, a home that was purchased for $225,000 in January 2019 is now worth $234,000. That’s $9,000 of equity gained! With the current low interest rates, buying a home is a great investment. For the next three years, I think we will see continued home appreciation, and this is why. Historically, when there is a recession, home prices go up. Most economists are forecasting a recession this year or next.
We are still facing low home inventories across the nation, but low inventories equals an increase in home values.
Low mortgage rates
Home loan rates are low, and we expect them to stay low through the recession. Historically, when there is a recession, home loan rates drop. Lower rates will help keep home values going up.
Easing of lending guidelines
Lenders have started easing up on lending guidelines, but they’re doing so slowly, and I feel like these changes are good. I don’t think we are going as far back as the days when a buyer could fog a mirror and qualify for 5 homes, but we are back to a more common sense attitude about lending for most cases. All of these factors are pointing us toward an appreciating home value market.