Real estate experts at Zillow, a website that tracks home prices all around the country, have turned optimistic. This optimism is based on the most recent data collected by the site which shows that home prices posted their first year-over-year gain since 2007. Nationally, home values moved up by 0.2 percent in the second quarter of 2012 when compared to the same quarter in 2011. The first quarterly gain in five years is sign that the bottom has finally been reached.
Prices have now risen for four consecutive months. Zillow Chief Economist Stan Humphries noted that “The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own.” However he cautioned home owners that the future will not include a rapid return to double-digit price appreciation.
Analysts from Zillow expect home values to remain relatively flat as the market works through a backlog of foreclosures and high rates of negative equity.
What does the housing market look like a year from now?
Over the next 12 months, Zillow actually expects home values to be nearly unchanged, with the national average price seeing a small increase of 1.1 percent. Muted price gains are likely until the economy shows a more positive trend. Humphries expressed concerns about both inflation and the threat of a fiscal cliff that the federal government is racing towards with spending cuts and tax increases that would hurt the economy if implemented without changes.
Times of economic uncertainty are exactly the right time to consider a reverse mortgage. Selling your home now in order to downsize for retirement or even finance your retirement could mean selling at the bottom. Holding onto your home and accessing the equity through a reverse mortgage would allow you to benefit from any potential gains in the market.
The fiscal cliff also points to a strong chance that low interest rates will be maintained for some time to come. This is a threat hanging over growth. Businesses are unable to plan effectively until Washington decides on what income tax rates should be. Spending priorities also have to be clearly established before the economy can fully recover. Until economic growth picks up, we should continue to see historically low interest rates.
Low rates are another factor that makes a reverse mortgage a smart move towards a more financially secure future. Slow appreciation in home prices will offset the interest charges on the mortgage. You could even see gains in your equity in some real estate markets.