When it comes to predictions for the upcoming spring housing season, there are mixed opinions. The season will not begin for another couple of months but already, experts in the housing industry are having strong disagreements about the outcome. In fact, new reports coming out also have differing viewpoints.
Without question, the country is rebounding better than expected. More than 200,000 new jobs have been added nationwide, wages are going up, interest rates are low, gas prices are extremely cheap, and overall, economic conditions are improving. As a result, the housing market is also doing well. However, challenges still exist to include tight lending practices, high priced homes, and low inventories.
In a statement reported in the Scotsman Guide from David Blitzer, chairman and managing director of the S&P Dow Jones Indices index committee, at this time, the housing market has barely made it to first base. Regarding the possibility of the market making a home run this year, chances are poo.
He also made comments in a monthly report from S&P/Case-Shiller pertaining to home prices saying that in November of 2014, price gains eased. He added that while strong gains occurred, they were restricted to the Pacific Northwest, Dallas, Denver, Florida, and California. For the remainder of the United States, gains are lagging behind the national average.
A Brighter Outlook
Countering Blitzer’s claims is a more recent report used to measure prices and sales in January that shows the spring housing market will be more optimistic. Some professional real estate brokers stress that for last month, home prices were 7.6 percent higher when compared to the same time last year. The report also indicated that demand for home tours of listings were at an all-time high last week, in fact, up an impressive 62 percent from last year.
Some professionals in the industry feel that easier loans coupled with historical low interest rates feels very familiar with 2013. For example, an agent in Seattle Washington hosted an open house for what was considered a traditional townhome. In just one weekend, 132 people showed up to view the home. Another home was shown in Denver and in a single day, 23 viable offers were made.
In addition to incredibly low interest rates, annual premiums were lowered by the FHA, the government insurer of home loans. Premiums dropped by one-half a percentage point, which annually, equates to a savings of about $900. Although this is not an exorbitant amount of money, for many homebuyers it is enough to be enticing, at least enough to walk through the property and give it serious consideration.
However, smart homebuyers being unwilling to spend more than they have to along with improving housing inventories through the spring months, home prices will probably remain somewhat volatile. Because of this, buyers have more leverage. Traditionally, when prices increase too quickly, homebuyers will back up and wait for them to decline, which is what happened in 2013, leading to a drop in sales throughout 2014.