Our predictions are beginning to sound like a broken record, but they’re not really predictions at all as anybody who can view a chart can easily see what’s going on, and until something changes the trend may continue.
It’s been said if you put 10 economists in a room you’ll get 10 different opinions. I think it’s easy to see we have a supply and demand situation whereby the market is eating up more homes than are coming to the market. For instance, in April 868 homes came on the market while 1,097 sold. Additionally, some homes expire or get foreclosed upon and don’t re-enter the market in a timely fashion, so this impacts the numbers even more.
As you can see by the attached charts, inventory has been going down since January of this year, and is down significantly since January 2011. In fact single family home listing inventory is a mere 55% of what it was back in January of 2011.
Median single family home prices were $88,500 in January of 2011 and today they stand at $132,000, up 49.15% in just less than a year and a half. Prices are up 6.97% since January 2012.
Buyers are increasingly panicking when buying property as they’re often in multiple offer situations. It forces them to carefully consider how important the home is to them. Quite often it depends on how long they’ve been in the home buying process as reality tends to set in after several failed attempts to purchase their home.
Buyers typically look at several homes then rank them in terms of desirability. Quite often a buyer will make an offer on their #1 choice. If they miss out, they may move on to their #2 choice. Some buyers wait for another like kind home to enter the market, but their hope turns to disappointment when that homes doesn’t appear, or if it does it’s priced significantly higher than the one they lost out on.
This whole scenario sets up an unrealistic expectation that future homes will meet their #1 choice criteria in terms of desirability and price but the reality is the next home may be less desirable and more costly in a rising market with limited inventory.
After the buyer loses out on 4-5 homes that reality tends to hit and they reset their expectations. It’s an uncomfortable process and one that each buyer addresses in their own way and in their own time frame. They can fight the market and live in denial and prolong the process and possibly never buy a home, or they can accept the market, educate themselves, and win their 1st choice, or hopefully their 2nd choice.
Sellers go through the same scenario in a buyers market. A seller may require a certain price or terms only to be left at the altar by buyers who liked their home but found a better offer from another home. It really doesn’t matter if the buyer or seller likes the market we’re in. The market just is what it is, and if they want to accomplish their goal it pays to learn the market sooner rather than later. In each case lack of knowledge can cost the buyer or seller significantly in price, desirability, and peace of mind. It pays to work with a professional that can educate you on your options.
Good luck, and Happy House Hunting! We at the Ellis Team at RE/MAX are here to help if you need us.