When you look back over the past 100 years, the real estate market statistics show what is normal. Here are a few items that occurred over the past five years that were not normal:
1. Foreclosed properties make up to 33% of all sales. Not normal
2. Investors paying cash make up 33% of all sales. Not normal
3. Federal Reserve buying trillions of dollars of mortgage backed securities to keep mortgage rates low. Not normal
4. House prices declining over 10% (20-30% in many areas). Not normal
5. Mortgage refinancing making up over 50% of all mortgage applications. Not normal
6. Home ownership percent dropping five straight years. Not normal
Here are the latest trends on why ‘normal’ is coming back. Foreclosed sales are now below 15% of all sales and new foreclosed properties are at a five year low. Investors paying cash have backed off now the house prices have jumped 10-20% in the past year. The Federal Reserve is about to taper back it’s purchases, many are surprised they haven’t started yet. Home prices have jumped in the past year, but the increases are starting to slow down. 3rd quarter mortgage volume is down 40% with refinancing all but dried up. Rents continue to rise and those renters will soon decide home ownership is a better value.