February 26, 2014 — What used to be described as the “beleaguered” housing market has entered a new phase these days. This week it received more great news. But, if that is good for you as a potential buyer in the retirement housing market is another question.
First, according to the Standard & Poor’s/Case-Shiller price index housing prices in the 4th quarter of 2013 rose 11.3% compared with a year earlier. Home prices haven’t recovered everything they gave back from 2008 -2011, but they are getting closer in most markets.
Second, the Commerce Department reported that sales of single family homes surged in January. They rose 9.6% from the previous month, reaching their highest level since July 2008. Economists were particularly cheered with this report since it had been assumed that cold weather and higher interest rates were going to hurt the market.
Third, it looks possible that Congress might pass a bill that will soften the flood insurance rates that otherwise will soon drastically effect tens of thousands of homeowners. The bill, a move welcomed by home builders as well as home owners, would more slowly phase in the increases that were mandated in 2012 to bring the cost of flood insurance more in line with actual claims. Coastal areas like Florida are very interested in the passage of this bill.
Good news for retirement market?
Higher prices and an accelerated sales rate might not necessarily be good news for you as a person looking for a place to retire. Places will be scarcer and more bidders looking to buy – that doesn’t soound like a good thing. But there are possibly some positive here. Many builders stopped construction or greatly reduced the scale of their projects in the recession, while others went out of business. One silver lining is that builders are more optimistic, which means they will be building more houses. That means a greater choice and more inventory down the road. And, if they react to the changing tastes of the market, more likely they will be building the kind of home you might like to buy and live in.
As for the bill to phase in flood insurance increases, that would be very welcome news to existing home owners, especially if a provision to allow sellers to pass on lower rates to new buyers stays in the bill. However if you are a buyer of a home in a flood zone, you should be very cautious to find out what the new insurance rates will be down the road. It usually makes more sense to rebuild above the flood zone than to worry about your home being destroyed and having to pay prohibitively high rates.
Comments: What are you seeing in the housing market when it comes to costs and choices? Is it getting tighter, or about the same as it was? Are you effected by the 2012 flood insurance reform? Please share your thoughts in the Comments section below.