Despite a severe economic recession, the home prices continue to raise
At the beginning of the year, the most common prediction was that the prices should become lower as there was a strong growth of prices for real estate during the last year. On the opposite, the first quarter of this year has shown a tendency of price increasing. The recent survey has shown that the prices at the beginning of 2013 have become 8.1% up comparing to the last January and also have reached about 6.8% growth in December. One of leading analysts, Ivy Zelman, states that she is expecting prices to increase by 7% this year, instead of expected 5%, 6% or 7%. She also predicts the next year growth up to 5%. Her colleague, the analyst John Burns claims for a 9% rise this year, comparing to 5% the last year. Both specialists explain such a situation by several reasons. First of all, the price increasing is encouraged by a strong growth of demand. People want to buy housing as it is supposed to be the profitable way of investing. Secondly, the availability of mortgages, convenient loans and low interest rates stimulate the purchasing power of people. The general anticipation is that the average growth this year will be about 4.6%, according to the recent survey among the economists and housing forecasters.
To my mind, there will be no price reduction in the forthcoming
The tendency of price increasing has a strong economic background, which is explained by the rise of demand and supply. I think that the consequences are very controversial. On the one hand, this situation means that the real estate companies will become wealthier which will affect the general level of economic growth. On the other hand, a constant price increasing could eventually lead to the slump of prices.