One of the most common questions I receive is what is expected in the real estate market this year? This spring is off to an incredible start and home prices are rising month after month based off the data we’re seeing. Does it seem like prices will continue to rise?
All we continue to hear is that demand continues to increase faster than supply. The inventory is still low as I talk about every week on my radio show, we need listings.
After all, existing home sales were up 9% year over year in March, according to the National Association of Realtors.
Although inventory is increasing, it hasn’t caught up to the amount of buyers searching for a home, resulting in a tight supply getting even tighter. A balance of homes on the market is considered to be six or seven months; the supply has been under five months
since December. When looking at every quarter since 1988, when supply was under five months, prices rose 8% year over year on average. When supply was balanced, prices
went up only 4% on average.
The median existing home price in March was $212,000, up 8% over last year, according to the NAR. The median list price in March on realtor.com was $220,000, which was up 11% over last year. During the peak years of the housing bubble, from 2003-2005, the data on supply versus price appreciation looked very similar to what we are seeing now. There are important differences, which is why most feel prices will continue to rise for now.
Rent continues to rise, renters will pay at or above inflation in 2015; therefore, more renters will realize owning a home is a much better option. Nationally, rents increased an
average of 3.6% in 2014 and nearly 11% over the last three years. Interest rates remain historically low.
As the economy continues to improve and more first time buyers leave the nest, prices should continue to rise. As prices continue to rise, it will encourage more home
owners who have been upside down to put their homes on the market. Everyday more & more builders are building homes and searching for land. Over time this will help
our issue with the lack of inventory and offer buyers more choices, but for now we should all be enjoying the fact that home prices are rising!
With the lack of inventory, buyers need to be prepared to make an offer if they find the right home. These are some tips that can help you be better prepared:
1. Don’t wait for the perfect house … there isn’t one. Compromise & prioritizing are necessary elements in home purchasing.
2. Don’t buy before you do some comparison shopping…especially if you’re new to the area.
3. Don’t write an unrealistic offer or you will simply be helping someone else’s offer look good (too low of a price…too many contingencies).
4. Don’t feel a need to negotiate if a property is fresh to the market, priced right and popular… the good ones often go quickly and at full or close to full price.
5. Don’t think all real estate agents and companies are created equal…they are NOT. Find an agent/company with a great track record and proven home buying system.
6. Don’t be afraid to write an offer above or below the asking price… offer what it is worth to YOU.
7. Don’t work with more than one agent. Find one you like and stick with them. If you make a bad choice, change but stick with the new ONE.
8. Don’t wait for perfect conditions to buy. The best time to buy is when you have found the right home.
9. Don’t get too many friends and family involved in your buying decision… you’ll go NUTS!
10. Don’t wait until you find a home to shop for the best loan. Start up-front.
11. Don’t wait until after you find a house to be qualified for a loan. Do it up-front.
12. Don’t work with an agent who can’t show you Checklists & Systems. Only pick a friend or relative that is licensed as an agent if they are GOOD! Look for value-added services.
13. Don’t be surprised if you get buyer’s remorse at some time before closing…most buyers do. It is normal and it will pass.