The real estate market in the United States has bounced back remarkably from the housing crash of the late-2000s. Low-interest rates and limited inventory produce an ideal environment for sellers. Homes this spring are selling faster than ever.
Home sales jumped nearly 9 percent in March compared with March 2016, even as the number of homes for sale dropped 13 percent, according to a new report from Redfin.
In fact, today is the most profitable time to sell a home in almost 10 years.
Realtor.com also reports that active inventory on the website was down 11% in December of last year compared to inventory in December 2015. And that’s after 51 straight months of already below-normal inventory levels. As a result, 2017 was starting out with the smallest inventory of available homes since the last recession, if not longer.
Housing experts are predicting existing home sales of 6 to 6.5 million units in 2017 and then above 1.3 million new homes being built per month up to 2024.
But will it be enough?
American builders are feeling optimistic; however, 1.5 million units is more what is needed to fill forecasted demand.
Buyers, on the other hand, often face escalating real estate prices, bidding wars and lengthy search periods as they enter an increasingly competitive market. Even as more homes come on the market for this popular sales season, they’re flying off fast with bidding wars. With that said, record high prices in some local markets are not thwarting hungry buyers, as they rush to take advantage of the lowest mortgage rates of the year.
In order to compete, buyers are coming in with cash and dropping contingencies. That is because, in such a hot market, homes are appraising well below the sale price. Home prices have now surpassed their last peak, and at the entry level, where demand is highest, sellers are firmly in the driver’s seat.
More homes came on the market in March, but fierce demand made quick work of them. At the end of the month, the supply of homes for sale nationally was down 6.6 percent compared with a year ago, according to the National Association of Realtors. Unsold inventory is a slim 3.8-month supply. A balanced market between buyers and sellers has a 5 to 6 – month supply.
The steep competition also pushed the median price of a home sold in March to $273,000, up 7.5 percent year over year.
According to recent data from the Mortgage Bankers Association, purchase activity is up 3% year over year despite an increase in interest rates. While the longer-term trend for rates is higher, we are seeing a bit of relief right now as well-qualified borrowers start seeing rates of 4% or less —the lowest levels of 2017. That will only spark more activity in the coming months, fueling already high demand.
Unemployment is ultra low, the labor market is very tight and Americans are finding plenty of work. The headline unemployment rate fell to 4.4% in April as payrolls surged after a March lull. The details also were encouraging, with hourly pay up 2.5% year over year and hours worked slightly higher. A strong job market means more Americans with stable family budgets, and that ultimately results in a robust housing market.
Comparable properties, sometimes called “comps”, sold in your area also impact your own home’s market value. Appraisers and real estate agents look at recent sales of homes with similar features to use as a benchmark against your home’s potential price. Cities with robust local economies have seen strong price growth during the housing market’s recovery. Low housing supply has helped push up prices to create competitive markets where bidding wars and above-asking price sales are common.
Because of the hot market, over 50% of homes are being sold above list price, this adds value to your property as well.
Homeowners who sold in the first three months of this year saw an average price gain of $44,000 from purchase, according to a report from Attom Data Solutions. That’s the highest gain since 2007.
Not only are home prices rising, they’re moving fast. On a national level, homes sat on the market for an average of 45 days in the first quarter, down from 84 during the same time period in 2011, according to data from Clear Capital. The houses in really good condition are selling really fast.
In the five fastest-moving markets, homes are on the market for less than 21 days.
If you have any kind of challenge with your property — busy street, odd floor plan, hadn’t been able to sell it three years ago — now is the time to put it on the market!
But not all homeowners are swimming in equity and have buyers lining up around the block.
Some say a home in this market will sell itself. That’s true, but only if it’s priced strategically, staged well, photographed professionally and marketed properly. That’s why it’s important to pick the right real estate agent.
If you are looking for the best results, it’s important to come to the market prepared, rather than just assume that selling your home will be a snap.