Economist from Bank of America have just announced they expect home prices to rise 6.4 percent in 2012, from a previous estimate of 5 percent; and 4.7 percent in 2013, from a previous call for 3 percent growth. This is quite a jump from earlier predictions but there are several factors that play into this equation. Factors that have been slowly causing home prices to rise since 3rd quarter of 2012.
The main factors are more momentum, a steady decline in inventory (homes on the market), and credit availability and low rates. The momentum is the rate at homes are selling and the prices they sell at. Many economists use current home prices to predict future home prices. The few sources of homes on the market are made up of a mix of distressed homes, some new-construction and what standard sales that are not selling. Lenders are keeping rates below 4% in addition to recent mortgage policy announcement, buyers will continue to take out mortgages. Hopefully with the continued incline in home prices and optimism in the economy we will see more of a job market as well as a more stable economy. Read more at: Is the Housing market a link to a better job market?