As home prices continue to rise, one might wonder how long
before they level off. In an interview
with Rick Sharga, Executive Vice President of Auction.com, he predicted that rising home
prices will begin to slowdown moving into 2014.
“I believe home
price appreciation has been accelerated by the lack of available inventory and
by investor activity. And I think prices rose more quickly than they would have
because of investor activity.”
He added that
rising interest rates seem to only be a deterrent for actual home buyers not
investors, as most investors are liquid.
for real estate investors is actually the competitive market. Prices are rising due to more investor activity,
creating higher prices even in the shadow inventory. Many investors are holding back and waiting,
while others are making plans to exit the market.
to consider as to why an investor might stop buying and/or begin selling, would
be that they have already achieved the number acquisitions they had set out to
investors are expected to significantly taper their activity mainly due to the
nature of their acquisition model. The
lower end of the market is rising which makes it difficult to justify the rate
of return on a higher purchase price.
“As home prices
go up, borrowers who were either in negative equity or a neutral position are
suddenly finding themselves in the positive equity position and are able to put
their houses on the market,” added Sharga.
He also said the
in one year the supply and demand could be a whole different game as more
inventory, existing and bank owned, becomes available.
comment in the interview was that rising interest rates are a key factor to the
protection of another bubble.