Daily Market Update: Revealed: the top cause for rising house prices

by MPA08 May 2015
Revealed: the top cause for rising house prices
A new study reveals the top cause of rising house prices in US housing markets. With housing affordability a hot topic in many markets and with incomes still often failing to provide the level of mortgages that first-time buyers need to get on the ladder, the study looked into the motivation of buyers. It found that their willingness to take risks is based on their own expectations of the economic landscape. As this is often based on relatively unknown factors such as interest rates, consumer optimism or pessimism can determine how far they are willing to stretch their finances.

The study was authored by Joseph Fairchild at Bank of America and Jun Ma at the University of Alabama and will be published in the Journal of Money Credit and Banking. Wu commented:  "People speculate in housing market just like they do in any other asset markets. People buy houses not because they need a place to live, but because they want to or believe they can sell the properties for a profit in near future."

Wu believes that people should expect more volatility in housing markets: "To many households in the U.S., the house they live in is also their biggest saving account. Changes in housing price have a direct impact on their personal wealth."
Fannie Mae: Housing sentiment rises but no huge impact expected
Consumer sentiment in US housing markets has increased but it is unlikely to convert into a significant boost. That’s according to the latest National Housing Survey from Fannie Mae which shows that 63 per cent of those surveyed said they would buy a home if they were to move in the next 6 months. That’s up from a drop of 6 percentage points in the two previous months. Respondents also believe that home prices will increase by 2.8 per cent over the next 12 months. However high prices subdued confidence in now being a good time to buy, with a 4 per cent decline from the month earlier. Doug Duncan, senior vice president and chief economist at Fannie Mae said: “The share of consumers who intend to own rather than rent their next home rebounded after a two-month slide. Meanwhile, home price growth expectations strengthened to the strongest pace since last October. Nevertheless, consumers continue to express concerns about the recent weakening economic conditions and high home prices.” For those reasons Fannie Mae expects only a moderate increase in activity this year.
Keeping it in the family; Shakira’s easy choice of realtor
Shakira is selling her Miami Beach home and had an easy choice of real estate agent. The singer’s half-brother Antonio Mebarak is a newly-licensed realtor in the market and she has given him the accolade of listing the home. Mebarak, who was granted his licence last summer, is tasked with finding a buyer for the six bedroom home with an asking price of $13.9 million. The singer currently lives in Spain. 


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