From the Desk of Bob Caldwell
Why Are Home Prices Rising--Part Two
Today, the U.S. population is just over 315 million. So that means that as much as 85 million people will be added in the next 30 years, or close to one million per year. A perspective? In 1900 the U.S. population was approximately 76 million. So in 30 years we will have more growth than we had in the first 125 years. And while the economy was slumping, the population did not stop growing. This leads us to the final question -- will home prices keep rising in the short run? As we have presented previously, the shortage of inventory will disappear as prices rise and more homeowners (and banks) realize that they can get more for their homes and thus will offer them for sale. Recent data indicates that is happening. With more inventory, we are expecting the rise in home prices to slow down. However, with increased demand due to population growth, increased household formulation and confidence -- house prices could continue rising at a more sustainable level. Of a more immediate note, the employment report this week will be watched closely as the stock markets have experienced a wild ride while long-term rates have risen sharply over the past several weeks. We believe that the rise in home prices is actually very much related to the rise in rates. More on that next week.
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"From the Desk of Bob Caldwell" Blog, Copyright 2013 Bob Caldwell