The values of homes across America are going up and are at the highest point in recent history. The FHFA Home Price Index show that homes across the nation are climbing. According to the report, September marked a ten month climb that has produced a record high that hasn’t been seen since April of 2008.
Home values in the last year have climbed over 4.2 percent and 2015 is predicted to show even higher percentages. Part of this upward momentum is caused by an increase in demand for homes. As home buyers enter the market in record numbers following the early 2000s difficulties, demand is outweighing supply. The second part of the momentum is what has propelled so many new buyers into the real estate market: low interest rates. Today’s interest rates on conventional home mortgages have dropped so much they have skewed the economic scales in the buy vs. rent consideration toward the buy side.
Mortgage insurer Freddie Mac reports a mortgage interest rate at the lowest point in 18 months. These new low interest rates are giving buyers strong purchasing power even though home prices are going up. With many FHA and VA loan programs offering low interest combined with low or no down payment requirements, there are a lot of options for today’s home buyer.
This is a great time to be a home buyer in the U. S.
78-MONTH HIGH FOR THE HOME PRICE INDEX
The FHFA Home Price Index tracks home values from recent sales. It is produced by the Federal Home Finance Agency, also known as the FHFA. The report uses data from Fannie Mae and Freddie Mac, the government home mortgage backing plan.
The FHFA Home Price Index uses figures from a pre-boom era in home mortgage history circa 1991 to calculate a benchmark value of 100. In September of 2014, that figure rose to a value of 214.0. This is the highest figure since April of 2008.
Matching and exceeding the April 2008 value is of great importance in the current housing market. The housing collapse in the last decade had just begun in the early months of 2008 and home values hadn’t plummeted at the time in most areas of the U.S. That means that the values of April 2008 were still high, and using those figures to compare current prices show that the market has recovered significantly.
In April of 2008, the HARP program, the government bailout ‘Housing and Recovery Act, hadn’t come into being. The new September Home Price Index shows expansion and growth, even if slow. The demand is high and supply is struggling to keep up. This has led to higher home prices and strong competition in the buying market.
The National Association of REALTORS® gives figures showing that homes are selling in less than 30 days across the country. Today’s real estate buyers are having a more difficult time finding great houses at low prices. However, the lower interest rates are still giving buyers an added advantage and extra buying power. Where home prices were unbelievably low over the last several years, interest rates were soaring and home mortgages were difficult to obtain.
Today’s low interest rates have allowed buyers to purchase the higher priced homes at the same perceived value as those same homes at a lower price years earlier. Freddie Mac’s mortgage rate survey shows interest rates on standard 30-year mortgages at 3.97 percent in the U.S. Mortgage lenders have even quoted rates in the mid-3s, and adjustable rate interest have been given in the 2s.
The VA and the FHA offer even lower interest rates along with extra value for home buyers, and given them even greater purchase ability.