Why is it that values of houses rose dramatically in the past few years?

Question

Please attach links if you could. Thank You.

Answer 1

There are a lot of reasons. One of the key variables is the level and direction of interest rates. Short term rates have been rising since they hit their 40 year lows. Many people who are on the fence about buying real estate believe that long term rates are on the rise as well. Consequently, they jump off of the fence and buy. This pushes up demand, which in turn increases prices given a relatively fixed housing stock. Another reason is innovations in the mortgage market. Financial institutions and GSEs have been coming up with new products that have let more and more individuals buy homes who otherwise could not have made such purchases. A third reason is that, contrary to populist opinion, the economy is buzzing along. Unemployment is below 5%- anyone with appropriate skills/education and living in the right place can get and keep a job. Consequently, many people who were worried about income stability are now more comfortable taking the plunge. Again, this is an increase in demand.

There are many more reasons and interactions, but this should give you enough to chew on.

Answer 2

Because the interest rates for home loans has been at an all time low. In the 70's you could buy a house for 60,000 but the interest rate was around 20% or higher. That same house now would cost about 150,000 but the interest rate would only be around 5-8%. I bought a house a year ago and I got a 4.8% interest rate. Interest rates are going up though. So if you are looking I would buy before the end of the year.

Answer 3

Honestly because people pay the price. Same thing with vehicles, think about it, more and more people are concerned about :"looking good and looking like we got money" to others than anything else nowadays. If people would just stop paying such ridiculous prices for these homes and vehicles then you would see a price decrease, because noone would be buying them. I refuse to give in, I will not buy a new vehicle and I purchased a small home in the country that needed fixing up very cheaply when it would have cost me more than double what I paid had I purchased a home based on location and looks.

Answer 4

A couple of reasons, interest rates are relatively low, people know that real estate is a good investment, people are still moving to the U.S.
Also Real Esate has been doing a little flucuating. Housing has slowed down. Real Estate People are getting out of the business, Mortgage companies are laying off.
But investments in particular area are climbing because no one has invested in those areas. Boise Idaho, New Mexico for example.

Answer 5

Home prices rose much more dramatically than most other items. One factor was very low mortgage interest rates--but, as my father says, if you pay too much for a house, you're stuck with that price. If your interest rate is high, you can always refinance when rates come down.
When my husband and I bought our home in 1983, we were paying 13.25% interest on our mortgage! Needless to say, we refinanced that several times since then. But, the house cost us $73,000 and would go for about $430,000 now.

Answer 6

Certain infomercials showed how you could buy a house, fix it up and re-sell it (flip it) for a profit.
Many people got onto this bandwagon and houses that years ago, people would have bought just for themselves are now priced higher. People who want a first house have to fight off the "investors" or compete with them for the low prices.
Hopefully things will go back to the way they were.

Answer 7

The value of housing is dependent on demand. As the population increases and the amount of available land diminishes the value of all properties increase.

Answer 8

Cost of construction material, increase in buyers, increase in purchasing power, easy availability of finance in the market.Lower in interest rate for housing loan, reduction in income tax for availing housing loan etc.,

Answer 9

Inflation and mortgages are at an all time high, and if there is one thing that almost NEVER in history decreases in value, it's property.

Answer 10

Values of EVERYTHING rise, look at the consumer price index