Finally, I get to talk about why prices are rising! It has been many, many years since we’ve been able to enjoy rising prices. Of course, this has started at the low end of the market; however, it does seem to be filtering up even to $800,000 luxury homes and we are hopeful that the million dollar luxury market will be next. The major factors contributing to rising prices are: First, that banks have not been foreclosing or putting any new foreclosed product onto the market since last October. Bank foreclosures were the lowest price homes in the worst condition and a major contributor to downward prices. Without these homes coming on the market, the most distressed homes are gone. Further, with this product type making up as much as one-half the market, there is now a shortage of inventory rather than a surplus. Second, we also see fewer short sales than we had in the past. With prices rising some sellers are now seeing the wisdom of “waiting it out.” There is hope that with a couple years of rising prices they won’t be underwater anymore. On the negative side of this point, some sellers are not short selling because they know the banks aren’t foreclosing, so they are simply living for free as long as they can rather than short sale. Third, super motivated sellers are much more rare than they used to be. Most of the folks that really needed to sell already did. Now we have luxury sellers that recognize prices are on the way up and so they are holding out as long as possible before selling. All three of these points really lead to fewer homes for sale. The laws of supply and demand dictate when supply is low and demand is steady, prices will rise. Demand has been steady as the ability to get financing has eased a little and the economy has quit getting worse. Buyers realized that properties in Las Vegas were undervalued. Consumer confidence is steady and the general public is feeling positive about housing again. Time will tell how long it lasts and we still have a long ways to go to get back, but it sure is nice to see luxury homes appreciating in value again!
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