House Made of Tools
Everyone from home owners, potential home buyers, lenders, and property appraisers has their eye on the real estate market to see whether or not it will continue to rebound. Most recognize that it is slowly improving, but how long it can last is the biggest question on everyone’s mind. As a property appraiser, Abbe Edelman must watch the housing market closely as there are many intertwining factors which can affect property prices. March brings an end to the first quarter of a new year and so far the trends show that there is continued improvement.
Dual Reactions to Housing Improvements
This is the first time in a long time that those involved with the housing market are actually expecting prices to rise. Continually increasing prices have two very different effects. For the potential home buyer they are growing impatient and trying to secure a home while interest rates are low and before prices rise any further. But on the other hand, sellers are beginning to be a little more patient holding on to property to see if the prices will rise more. This has caused the housing inventory to be limited and have pushed prices even higher in some parts of the nation. This is a trend that is expected to continue into the spring market.
Effects of a Limited Inventory
From the end of the year until March home prices have continued to rise. In January of this year it was reported that number of new homes which were sold had increased over 15% from December, and that was almost 30% higher than January last year. Experts expect this growing trend to continue, however, there is a limited supply of new homes even available on the market with estimates showing there is barely over a 4 month supply of new homes. And while things look good, this is the tightest inventory since the bubble in 2005. The fact that sellers are retaining many properties to hold out for higher prices along with fewer foreclosures overall tends to limit choices for buyers and can end up reducing increases in home sales. For right now, it will remain a seller’s market for the most part which means inventory will remain low and sales will likely drop off.
Are Foreclosures Coming to an End?
March closes out the first quarter of the year with an increase in foreclosure inventories up, even though inventory overall remains down about 40% from the time it peaked in 2010. With foreclosures contributing to about 20% of the sales instead of 33% in 2010, sales are shifting to more conventional ones instead of those generated from foreclosures. Real Estate experts tend to agree that most of the nation has seen the worst of the foreclosure crisis and they remain hopeful that conventional sales will continue to rise.
One Major Obstacle Remains
Even with the increases, home prices have remained down but financing is still a huge obstacle and not just for the hopeful buyer. Of course those looking for a home to purchase continue to make offers but tightened mortgage credit prevents many for being able to close a deal. Another factor that is part of the financial barrier is the increased requirements for down payments. However, consumers are not the only ones who are having difficulty obtaining credit. When it comes to being able to access capital homebuilders are facing some pretty tough standards as well. This of course further constrains the inventory of homes up for sale. Most homebuilders are local small businesses and they just do not have the access to funds. As the recession is diminished new construction continues to rise and is presently about 26% above what was reported last year. However, it still needs to see about a 50% increase from where it is right now in order for the housing market to improve and to help increase home availability.
