Home Price Increase Not All Good News
Is it good or bad news that home prices have increased for two months straight?
This is quite a reversal from the first few months of 2009 when prices were falling by anywhere from 12 percent to 20 percent. One of my co-workers compared the start of last year’s housing market to a funeral.
At first glance, the increase in prices seems positive — it’s a sign that confidence is returning in the housing market.
More and more homeowners are starting to feel more comfortable and have decided to put their homes on the market after holding back for a long time. I’ve seen at least half a dozen for-sale signs pop up in the front yards of my neighbors in the last two weeks.
But the price increases are also bad news for buyers. Prices inflated so much during the housing boom, that the recent declines were welcomed by many who felt they would never be able to purchase a home in Greater Boston.
The price increase could be temporary, and of course, two months doesn’t make a trend.
The homebuyer tax credit encouraged buyers who were sitting on the sidelines, creating some demand. Meanwhile, inventory has been sagging but that could change as the spring market approaches and the economy improves.