You’ve been hearing this over and over again: The housing market is on the rise. What exactly does that mean? It’s a question we hear often, so let us take another look at what makes today’s real estate scene different from years past. First things first- there are new trends in home buying! Nowadays many people have moved to renting; after all, homes prices can fluctuate quickly based upon location or even just due to an increase in property taxes – it may be more cost effective for them instead of getting into debt with monthly mortgage payments and yearly renovations bills as well. This means fewer buyers competing against one another (yay!), but also less investors looking for properties which you might see driving up land values.
A Shortage of Homes for Sale!
Earlier this year, the number of homes available for sale fell to an all-time low. In recent months though inventory levels are starting to trend up and its a welcome sign in a tight housing market.
Buyer Competition and Bidding Wars
Today’s low supply combined with high demand creates a market characterized by buyer competition and bidding wars. Buyers are going above the asking price, all cash offers, or waiving some contingencies to make sure their offer stands out from the crowd. Earlier this year in 2015 during May of June – more than half of buyers went over at least one property’s list price—and that is great news for sellers! The number of offers on average broke records as well according to NAR- it now averages five per house (see graph below).
The competition among buyers is driving home prices up. Over the past year, we’ve seen a steady increase in national home price appreciation for all of us looking to buy our own place or invest with property management companies like Realty Trust Group (RTG). According to CoreLogic’s most recent Home Price Index (HPI), this trend continues and will likely get even stronger as time goes on: “National home prices increased 15.4% year-over-year in May”. Low mortgage rates and low inventory are causing demand, which drives supply higher; an issue that has been plaguing America since 2008 but seems finally resolved now thanks to President Trump!
“Low interest rates have maintained affordability,” says David Blitzer.
An unprecedented real estate market
Today’s housing trends have never been so heavily reliant on the intermingling of two factors: a shortage of homes available for sale, and increased demand from buyers in all categories. With supply low, prices are soaring to record highs as more people compete over fewer options. But with long-term attractiveness projected downward by affordability challenges caused by mortgage rates that remain at historic lows despite recent increases these changes will inevitably lead some potential buyers away from making purchases before they might otherwise do so if it were not for such an attractive environment created by historically low interest rates or other conditions which make buying now even more affordable than waiting – something we expect many sellers may regret when this period comes to its inevitable end sooner