The housing bubble burst has financially hurt many homeowners. At this point most want to hold on to their homes until it reaches the value they originally bought it for. Are these individuals only dreaming or will prices reach that level again?
Research prepared by a New Jersey based financial publishing house, HSH Associates, found there is a possibility that in a matter of ten years the housing market may reach the same sky high limits. So far the value of homes has depreciated a little over 32% between 2006 and 2009. Prices are expected to continue at this rate through June, 2010, and then increase about at a rate of 2.5% a year. After 2011, the company estimates an increase of 3% every year.
If we are to look at this prediction carefully, a home that was purchased for $300,000 in 2006 would now be worth $204,000. For the home that is worth $204,000 today to reach the same value it had over four years ago, according the formula we would need to wait 12 ½ years.
Our economy falls into a business-cycle every 10 years. If all else is held constant, then housing prices will dramatically increase in 10 years. Considering the fact that we cannot control many other conditions that may affect the economy, there is a chance housing prices might decrease.
With calculations and predictions we can estimate the cycle of the housing market as well as the rest of the economy. Some critics may say that banks will not be as lenient as they were today later down the line. Due to inflation alone the prices are set to increase at least between 6-10%. Not only that, the economy will work its way out of recession eventually, the job market will begin to flourish, individuals will be prepared for a higher down payment and banks will have the ability to lend.
Contributor, designer & admin for JohnHart Gazette.
