Home » News » Home prices faced a significant rise in US – Index Report highlights!

Economists survey real estate market in the United States thoroughly every year. Every progress, profit, circulation and fall in financial market of real estate sector is noted properly. Currently, it has shown a sudden appraisal in property price, in the US.

Price surge in real estate

A marginally low mortgage interest was charged by Federal Reserve from the year 2008 to revive the market after its collapse in 2007. This was solely for residential property and not expensive mansions or villas. The surge in price took place in the housing sector even though the market was running on ample amount of profit capital.

  • As per FHFA (Federal Housing Finance Agency) and HPI (House Price Index), in 2015, suddenly the price rose by 1.3% in the third quarter.
  • It was the 17th consecutive price surge in 2015.
  • From 2014 to 2015 the total surge price was 7% from one September to the other.
  • After considering the inflation on taxes and other property related interest, total surge was 1%

What are the possible causes for this price surge?

It is a point to wonder what caused this extreme price surge all of a sudden even when the market was operating so smooth. The probable reasons which caused such hype in real estate value are:

  • Low interest rates:

The interest rates charged by Federal Reserve were substantially low. This is why many realtors were keen in making deals. Buyers were increasing and sellers were making a lot of profit. According to that growth rate, bank finance was not showing much of a rise in the profit making area.

  • Housing tax policy:

The Housing Acts; 1986 Tax Reform Act and 1997 Taxpayer Relief Act, resisted section 121 and 1034. This made housing property to be the only sector where one can invest without capital gains. As a result, people started buying more property and were holding on to them. When an accommodation crisis rose, those residential properties were rented at a high price.

This way the banks were making very less profit, but the investors and property owners had to pay less tax, less interest and gain more. To bring this operating process to an end, a price surge took place.

The other 2 reasons were:

  • Strong buyer confidence: People would buy residential properties as it is a necessity as well as security.
  • Improved income growth

More detailed ‘housing bubble’ rate percentage:

Prices of real estate have increased in different locations with different surges between 2014 and 2015 September:

  • District of Columbia: 15.4%
  • Florida: 10%
  • Nevada: 12.4%
  • Colorado: 12.7%
  • Oregon: 10%
  • North Port Sarasota- Bradenton: 16.1%

This increased amount of price surge now has created a bit of trouble for the regional investors, sellers and buyers. US house property has seen this turmoil after a long time as the market has been marginally stable since the crash of 2001. As per survey in real estate sector, chances of prices going down anytime sooner are not expected.