Remarkably, now home prices are already approaching the highs of six years ago. The combination of low interest rates and pent up demand from homebuyers and investors (some foreign) have fueled the rebound. This rebound initially started at the entry, first-time homebuyer level and has now worked its way up to luxury price point. Many of those waiting for the bottom to hit recognized when it happened and have been jumping into the market ever since.
Some data shows that values in the Tri-Valley area have increased over 20% in the last 12 months -- quite an amazing and quick turnaround. The question now becomes, "Will history repeat itself as a result of this pent up demand being unleashed on our market?" This could cause property values to continue to dramatically increase to unsustainable highs, causing another needed future correction. Or alternatively, demand will be absorbed and our market stabilize with values increasing moderately year after year.
Most real estate professionals hope for the latter, so long-term stability and growth can be established in the real estate market. Home values based on consistent growth is healthy and will make it easier for both buyers and sellers to make long-term plans.
It is favorable to see current home values going up in our market. However, this market does present some challenges for both buyers and sellers. Because of very limited inventory, buyers are finding it difficult to purchase a home, finding themselves competing for available properties. One of the reasons inventory is low is that sellers fear that in selling their current homes they won't be able to find a suitable replacement property.
The best news is many homeowners have regained lost equity and, as a result, short sales and foreclosures have reduced significantly. Many owners are now able to refinance their existing loans at much lower rates because they have the lender-required equity back in their homes.