How Price Increases Might Benefit Buyers
For prospective home buyers, price increases can be complicated. When you're looking for a house to buy, you want prices to stay low so you can find a great deal but – after you've signed the papers and moved in – your opinion quickly changes. Once you own the house, any increase in the value of the property is welcome news. The higher, the better. However, there is one way rising prices can benefit buyers before they've closed the deal. For example, prices rise faster in markets where there aren't enough available homes for sale to meet buyer demand. In these markets, buyers will find more competition and declining affordability conditions. On the other hand, those same price increases also mean current homeowners are gaining equity and may be more likely to put their home up for sale, knowing they can sell it at a good price. That is especially true in today's market. In fact, according to a new report from Black Knight Financial Services, the number of underwater homeowners has fallen from 29 percent in 2012 to 5.6 percent at the end of the first quarter of this year. That improvement means a lot of homeowners who may've been waiting to regain positive equity before selling their home may now be ready to sell. And, as more homes become available for sale, current buyers will not only have more homes to choose from but the overall market will be more balanced, helping affordability conditions. More here.