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What factors contributed to a 1-year increase of 41.4 % in this area?

  • September 23 2013 - Whitman-Mocine
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Answers (5)

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No rational economic model justifies such a steep rise in home prices. Assuming a realistic sample size (i.e., it's not the case that the increase is explained because only 3 homes were sold). Most likely there was low inventory and buyers outbid each other getting lured by low interest rates. I

You have to do a careful financial analysis. In many cases the lure of low interest rates will force you to buy now BUT pay more for a home because of multiple bids such that your low interest rates will actually costing you more.

Worth reading about dragon kings and how steep rises in prices signal a bubble market!!!
  • September 23 2013
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There is a steep rise in rents with very low inventory so if you can purchase now interest rates have not been this low in several decades. 
  • September 25 2013
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That is quite an increase. It was engineered, at least in part as was the bubble. Easy money fueled the bubble until if finally burst.

The fallout of foreclosed homes was scooped up and sold in bulk to large investors who did not put them immediately back on the market. Most couldn't sell and the rest didn't want to. Homeowners and buyers attempting short sales faced months and years of uncertainty while the banks placed them and their agents into an endless voicemail loop. For many, the only update they received on their short sale was when they were told the home had foreclosed. Interest rates hit their lowest level in recorded history, luring out buyers to fight each other for what was left.

Voila!  Rising prices. The simple version.
  • September 23 2013
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Both great comments made and one another I want to ad. Have you had a Realtor check the data you are using? Data on sites online sometimes get skewed by incorrect data versus what a Realtor can provide can be more actual data.

If you need any help, please let me know.

All the best!

Michael
  • September 23 2013
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1. Bottom of the market was hit
2. Low interest rates
3. People feeling better about their circumstances
4. Higher demand
5. Lower inventory

All of the above create higher prices. Once you reach the bottom you can only go up and people sometimes follow the crowd. If other people want to buy, I want to buy, thus increasing demand.
  • September 23 2013
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