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Heading into the spring buying market, there are strong trends starting to emerge.
The inventory of homes for sale has increased on a year-over-year basis for eight months in a row. Home price appreciation has continued to grow, although at a slower rate. The homeownership rate has reached heights last seen in 2014, with millennials and Generation X leading the way!
Let’s dive a little deeper into some of the recent reports that have been released and what they mean for the spring buying season!
1. National Association of Realtor’s Existing Home Sales Report
Sales of existing homes were down for the third consecutive month in January. Some of this can be explained by the natural seasonality that the real estate market experiences every year, and some can be explained even further by a lack of homes available for sale on the market.
For the last eight months, the inventory of homes for sale has been higher when compared to the same month the year before. The challenge in the market is the mismatch of the type of home that is available for sale. First-time homebuyers looking for a starter home are often competing with other buyers to stand out, often outbidding each other.
Lawrence Yun, NAR’s Chief Economist, agrees that the market is still experiencing an inventory shortage.
“In particular, the lower end of the market is experiencing a greater shortage, and more home construction is needed.”
The median home price for homes sold in January was $247,500. This is up 2.8% from January 2018 and marks the 83rd consecutive month of year-over-year gains. The 2.8% growth in home prices represents the smallest year-over-year change since February 2012 but is a welcome change for buyers who had feared being priced out of the market.
Days on the Market
Properties that sold in January were on the market for an average of 49 days with 38% of homes on the market for less than a month.
Yun is positive about how today’s market conditions will help buyers this spring,
“Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low. Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.”
2. NAR’s Pending Home Sales Report
The national Pending Home Sales Index (PHSI) rose 4.6% to 103.2 in January from 98.7 in December. An index score of 100 is considered normal. All four major regions of the country experienced gains in January, with the largest increase coming in the South.
“The PHSI is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.”
Increases in the PHSI often predict increases in the level of home sales in the coming months, which is great news for the housing market leading in to spring! Yun had this to say,
“Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers.”
The question on everyone’s mind is what’s happening across the country and right here in Denver Colorado in regards to home prices? Are we going up or down? Buyers are wondering, should I wait to buy a house, are prices going down? Sellers are wondering should I wait to sell because prices may go up.
Hi, I’m Jenn Sells with eXp Realty here in Denver Colorado (yes that’s the real name I didn’t make it up). I know, I get it, with all the negative press out there, who do we believe.
Well, I say don’t believe me, and don’t believe the news, let’s look at what the experts are saying and what is actually happening right now. A report that came out from the National Association of Realtors shows that we have an average of a 3.6% increase across the United States in home prices. That is considered normal appreciation. Here’s the deal, yes, we’ve seen higher over the past few years and that is because we were recovering from the crash before. You can also see by this graph for Year over Year change in price we are seeing an average of 3% to 7.9% increase in almost all areas across the U.S. That’s what’s happening now but what’s in store for our future??? Unfortunately, my crystal ball is in the shop so Let’s see what the experts are saying.
The “Expectation Survey” which is a survey made up of a nationwide panel of over one hundred Economists, Real estate experts,& investment and market strategists, are predicting Cumulative Appreciation through 2023.
We’ve got the Aggressive ones who are predicting about 28.3%, the Inbetweeners anticipating about 17% and the super conservative who are predicting an overall cumulative appreciation of about 6 and a half percent. So the “experts” are anticipating a slow and steady normal appreciation of home prices over the next five years. If you’re thinking about buying it doesn’t look like home prices are going down anytime soon. If you’re wanting to sell, they are going up BUT So is the house you are going to purchase. Let’s not forget about interest rates and how they affect buying and selling.
According to experts like Fannie Mae, Freddie Mac, the Mortgage Brokers Association and NAR, they are predicting interest rates to slightly increase through quarter four. So remember buyers and sellers, as interest rates increase you need to think about how they affect what your mortgage payment will be and also how many people will be able to qualify to purchase your home. Buyers, remember as interest rates increase so does your payment. Sellers need to be aware that the number of people who can qualify to buy your home actually goes down as interest rates increase. So there you have it, the housing market is looking good. As always feel free to reach out to me for anything community or Real Estate related. I want you to love the home you live in! Remember when it comes to Denver Real Estate Jennifer Sells... Sells!