During the spring and early summer months, a greater number of people begin to house hunt. In fact, accounting for about 40 percent of all home sales during the year, the months of April, May, June, and part of July are the busiest. The fact that in many parts of the country sellers has an advantage, gaining knowledge about purchasing a home this season is important for buyers.
Important Home Buying Information
From a high level view, it appears as though the housing market has stabilized, especially since numbers have improved following the recession. However, for buyers, in particular first-time buyers or those buying lower priced homes, things are not quite as rosy. Some of the additional factors to consider for this buying season include:
- Low Inventory – Lawrence Yun, chief economist with the National Association of Realtors, believes this season will be solid. Yun points out that there is adequate buying activity but admits the problem is a lack of supply. Simply put, there are not enough available houses to satisfy current demand. Typically, a healthy market consists of a six-month supply of homes but for newly built homes, there is only a 5.3 month supply and for previously owned homes, just 4.8 months.
- Increasing Prices – As mentioned, a number of factors are forcing the price of homes up. In looking back to 1975, the cost of homes has gradually and consistently increased about 1 percent annually. However, in looking at the latest available data from this past March, the price for single family homes is at around 4.1 percent annually, which includes inflation. This means in many markets, homes are selling at or above the listed price.
- Less Investor Competition – Something else to consider for this spring’s housing season is that the competition from investors is on the decline. For homebuyers, this is great because it means the level of competition is lower. For years, single family homes were snatched up as investment opportunities but for the latest quarter, sales are at 3.4 percent, down from last year’s numbers of 6.2 percent. Of course, there are some areas of the country where investor competition remains strong but for the most part, investor buying has declined.
- Easier Financing – Although mortgage rates could rise in the near future, for right now financing has become easier. Additionally, requirements for being approved on a mortgage loan have lightened and many lenders now offer potential homebuyers with more options. This coupled with an extremely low interest rate, someone with poor credit or a low down payment might still be able to qualify to own a home.
- Affordable Housing is Going Fast – Compared to 2014, the affordable housing market is moving quickly. Because of this, some homebuyers will have a difficult time finding a home within a reasonable amount of time. Especially for first-time buyers, this will be a major challenge. In a recent analysis of homes listed throughout the country for a specific market, of the 60 available, only five were still listed after three months.
Fast, Accurate, and Reliable Real Estate News
To learn more about the fast-changing housing market, as well as other real estate news for residential, commercial, and industrial, we invite you to visit The News Funnel. Our team of professionals provides only relevant, accurate, and newsworthy stories and information for brokers, agents, investors, agents, and developers. By staying on top of changes within the real estate market, there is a much greater opportunity for success.