Lawrence Yun of The National Association of Realtors reported today that US home prices are expected to increase by 15% over the next three years. Home prices have fallen 1/3 or more from the peak in 2006, while in 2012, and in South Florida in particular, prices are stabilizing. Builder confidence is at its highest in 4 years and the supply is very tight. In Miami Beach, inventory is at around a 3 month supply, which is very very low. An increase in home price may encourage buyers to purchase larger homes since mortgage rates are still remaining at all time lows. More news was reported from an economist at Wells Fargo, Mark Vitner, announced, “We will be at an all-time low in interest rates late this year or early next year.”
Those buying bigger homes or modifying their mortgages to improve their homes will stimulate the economies as well. Everything from home stores to real estate professionals benefit from the low mortgage rates and increased spending a rise in building produces. Lawrence Yun also said, “Builders need to add more. We need to moderate the price growth.” Yun predicted construction to increase by 1.3 million units by 2014 which is still below an average of 1.5 million. The small home builders are the last to build because labor costs and materials are still high and local lenders are not openly lending. The luxury market has experienced an opposite reaction from lenders growth is the opposite. Lenders in the South Florida have opened lending to luxury developers such as The Related Group due to the promise of cash buyers that have demanded luxury development throughout 2012. 83 new developments have been proposed in South Florida in the past 6 months. For the latest in development news, keep up with our blog!