Lately we’ve been focusing on the local real estate market as we know all real estate is local. However, sometimes the national market helps us spot trends that may affect us in the future. National Housing Market Update.
When Northern markets have struggled in past years it made it difficult for some buyers to purchase down here because they no longer had the equity they used to have in their current home or they just couldn’t sell their home to make the move down here.
RE/MAX International releases a national monthly housing report which is a survey of 52 metropolitan areas. The latest report released in July shows transactions were up 4.1% over last year even though they dipped from May 2013 levels.
This dip could be due to limited inventory nationwide. This year there are 23.9% less homes on the market. This would explain why we have only 3.0 months supply of inventory nationwide. This low supply typically indicates a sellers market.
Rising rates may curtail transactions somewhat as less people qualify for what they used to just a few short months ago. Fannie Mae did a study that said this theory isn’t true. Sometimes rising rates act as a motivator. Inventory levels are probably the biggest threats to transaction volume right now.
Local numbers haven’t been released at the time this article is written. Our internal analysis suggests a 30%+ rise in price over last year with all price ranges except for $100k and under posting fair to large sales gains. The reason the under $100k market is posting losses in sales is because with recent price gains there are fewer lower priced homes to sell. We saw exceptional strength in the $600-1 Million price range as well as the $250k-$400k range.
We have 14% fewer active listings and a 17% rise in new pending sales locally. This too should drive prices higher going forward.
To relieve some of this pressure builders are seeing more activity. Going forward building will become a viable option. The only downfall to building is locking in the interest rates. If it takes 6-9 months to build a home there is a significant amount of time rates could rise. Remember, a 1% increase in rates takes away about 9% purchasing power, so a buyer has to be careful when they select their home today that they can afford it when the home is completed. Locking in rates that long is almost impossible and costly if more than 45 days out.
Perhaps builders will offer interest rate protection one day but either way it’s built into the price of the home.
More than 800,000 homeowners regained positive equity in their home in the 1st qtr of 2013. This could spur more sellers to enter the market. Many homeowners have been trapped in their home and can now afford to make the move. Many are motivated to beat the interest rate hikes. Even if they wait for their home to go up a little bit more in value it still costs them to wait as the home they’re buying is also going up as are the rates to finance it. Waiting is a double whammy for a seller right now.
If you’re thinking about making a move in today’s market, give us a call at 239-489-4042 We’ll show you your options and you can decide if a move makes sense for you right now. It always helps to get the facts before deciding one way or the other.
Good luck and Happy Selling/Buying!!!
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