The past several years have been tough for homeowners who were trying to sell their homes or hoping to increase their equity. Will the next few years be any better?
No one has a crystal ball, but the predictions made by Fiserv's chief economist are in line with the opinions I've heard from others in the field.
According to an article in the December issue of Money magazine, Fiserv predicts a choppy real estate market in 2013 with prices increasing 3.4% from midyear 2013 to midyear 2014. That trend should continue with an annual increase in values of about 3.3% over the next five years. Keep in mind that these are national projections and local markets will vary.
The predicted annual increase of 3.3% may seem modest compared to the double digit increases between 2000 and 2006, but those increases were caused by loose mortgage lending practices and real estate speculation.
Many older homeowners have been spoiled by the rapid increase in home values since the 1970's when the Baby Boomers entered the housing market. Much of the rise in home prices between the 1970's and 2000 was due to the increased demand for housing by this large demographic group. Now that the Baby Boomers are settled in homes, or are downsizing, demand for housing should more closely match the supply, and prices are likely to appreciate more slowly than they did during that period.
