In today’s housing market, where supply is low and demand is high, home values are increasing rapidly in some parts of the country. Many experts are projecting that home values could appreciate by another 5%+ over the next twelve months – although that is a national statistic not necessarily what may happen here in Schuylkill County. Our inventory is tightening, as I did write earlier this week in a post a few days ago. As we move through the housing inventory, prices will rise, as it’s a factor of supply and demand. Less houses on the market, if demand stays strong we will see higher prices. If demand weakens, then prices may stay flat or inch up a bit, but will certainly stay under the 5% mark.
One major challenge in such a market is the bank appraisal.
If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the selling price when performing the appraisal for the bank.
Every month, Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraiser’s evaluation in their Home Price Perception Index (HPPI). Here is a chart showing that difference for each of the last 12 months.
Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let’s get together to discuss this, and any other obstacle that may arise. Our agents here at Ramus Realty Group understand the market. They know the neighborhoods and the inventory, and can help you find the right house for you, and advise you in pricing strategy.