30
Nov 17

The Real Reason Home Prices are Increasing

The Real Reason Home Prices are Increasing | Simplifying The Market

There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.

It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart 1).

The Real Reason Home Prices are Increasing | Simplifying The Market

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes has been below six months for the last four years (see chart 2).

The Real Reason Home Prices are Increasing | Simplifying The Market

Bottom Line

If buyer demand outpaces the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.

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30
Nov 17

This Modern Home has a Climbable, Ladder-less Bookshelf

Floor to ceiling bookshelves are on many a design enthusiast’s wish list. This diagonal, climbable bookshelf not only looks great, but it is also part of the structure of the home.

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30
Nov 17

A Nordic Style London Flat — House Tour

Name: Isabella and Oscar
Location: Wembley, London
Size: 870 square feet
Years lived in: 1.5 year, owned

Having grown up, studied, and worked in Hong Kong, Isabella and Oscar went on a trip of a lifetime to Iceland, fell in love with Europe and decided to relocate to London together to pursue their dream of traveling around this little continent. Isabella, a graphic designer and Oscar, an art director, both found jobs in the creative hub of East London, but when they were looking for a home, they were immediately taken by this two-bed flat by the canal in Wembley, London.

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30
Nov 17

Diane Keaton's New Home is Very Diane Keaton

How many times a day do you stop what you’re doing in order to wonder where in the world Diane Keaton hangs her many hats? What kind of furniture is she sitting on when she sips either the red or white varietals of her wine, The Keaton? Well, thanks to a feature in Wine Spectator, our Diane-design related questions have been answered.

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30
Nov 17

Everyone On Pinterest Is Obsessed With This (Slightly Ridiculous) Holiday Decor Idea (& We Don’t Hate It)

In a day and age when social media and inspiration-heavy sites like Pinterest make you feel like everything you create for your home or how you decorate for the holidays has to be (literally) picture perfect and super chic, there are rays of hope that sometimes the internet is up for something slightly ridiculous. Case in point: the recent obsession with not-the-least-bit-elegant-but-maybe-pretty-great giant balloon Christmas lights.

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30
Nov 17

The Small Appliances We'd Bring to a Deserted Island

The “stranded island test” is a good way to think about the products you use that you really, truly love. I asked the Apartment Therapy editors what one small appliance they’d bring along if we were all whisked away to an island in the middle of nowhere (where electric outlets may or may not exist, but that part isn’t supposed to matter).

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29
Nov 17

2 Charts That Show the Truth about Home Affordability

2 Charts That Show the Truth about Home Affordability | Simplifying The Market

There is a lot of discussion about the current state of housing affordability for both first-time and move-up buyers, and much of the narrative is tarnished with a negative slant. However, the truth is that housing affordability is better today than at almost any time in our history.

The naysayers are correct in the fact that affordability today is not as good as it has been over the last several years. But, we must remember that home prices collapsed during the housing crash, and distressed properties (foreclosures and short sales) kept home values depressed for years. When we compare affordability to the decades that proceeded the crash, a different story is revealed.

Here is a graph of the National Association of Realtors’ Housing Affordability Index. The higher the graph, the more affordable homes are.

2 Charts That Show the Truth about Home Affordability | Simplifying The Market

We can see that affordability is better today than in the fifteen years prior to the boom and bust.

CoreLogic just published a report showing the National Homebuyers’ “Typical Mortgage Payment.” Here is a graph of their findings:

2 Charts That Show the Truth about Home Affordability | Simplifying The Market

It reveals that, though a ‘typical’ housing payment was less expensive in 2012 (remember distressed properties), it is currently less expensive than it was in 2000 and is still projected to be lower next year than it was in 2000.

Bottom Line

Mark Fleming, Chief Economist at First American, explained it best:

“While borrowing power for the potential home buyer has fallen relative to the low point of 2012, it remains high today and will remain high next year, relative to the long run average. If you don’t want to rent anymore and are considering becoming a homeowner, even if mortgage rates rise next year, your borrowing power will remain strong by historic standards.”

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29
Nov 17

This Is The IKEA FRAKTA Holiday Hack We Should've Seen Coming

It’s been an eventful year for IKEA’s humble, hardworking blue bag. So we really should’ve seen this holiday themed hack coming.

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29
Nov 17

Barb Makes a Comeback in Sesame Street's Stranger Things Parody

If you just can’t wait for season 3 of Stranger Things — or have tiny humans in your life who don’t understand what all the fuss is about — Sesame Street has got you, with a kid-friendly parody of everyone’s favorite ’80s horror revival.

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29
Nov 17

A Small Seattle Studio That Looks Much Larger Than It Is — House Tour

Name: Angel and Ben
Location: Fremont — Seattle, Washington
Size: 580 square feet
Years lived in: 1 year, renting

The first thing you notice when walking into Angel and Ben’s Fremont studio is the huge floor-to-ceiling windows at the far end of the space, letting light pour into their living area. And the giant floor plant sitting by the Juliet balcony makes it feel like the outside is spilling in, tricking the eye into adding extra square footage to this less-than-600-square-foot Fremont apartment.

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