We all realize that the best time to sell anything
is when demand is high and the supply of that item is limited. The last two
major reports issued by the National Association of Realtors (NAR)
revealed information that suggests that now is a great time to sell your house.
Let’s look at the data covered by the latest Pending Home Sales Report and
Existing Home Sales Report.
THE
PENDING HOME SALES REPORT
The report announced that pending home sales (homes
going into contract) are up 3.9% over last year, and have increased
year-over-year now for 14 consecutive months.
Lawrence Yun, NAR’s Chief
Economist, expects demand to remain stable through the final two months of
the year, and “forecasts existing-home sales to finish 2015 at a pace of
5.30 million – the highest since 2006.”
Takeaway: Demand
for housing will continue throughout the end of 2015 and into 2016. The
seasonal slowdown often felt in the winter months hasn’t started and shows
little signs of being near.
THE
EXISTING HOME SALES REPORT
The most important data point revealed in the report
was not sales but instead the inventory of homes on the market (supply). The
report explained:
Total housing inventory decreased 2.3% to 2.14
million homes available for sale
That represents a 4.8-month supply at the current
sales pace
Unsold inventory is 4.5% lower than a year ago
There were two more interesting comments made by Yun
in the report:
1.
"New and existing-home supply has struggled to improve, leading to few
choices for buyers and no easement of the ongoing affordability concerns still
prevalent in some markets."
In real estate, there is a guideline that often
applies. When there is less than 6 months inventory available, we are in a
sellers’ market and we will see appreciation. Between 6-7 months is a neutral
market where prices will increase at the rate of inflation. More than 7 months
inventory means we are in a buyers’ market and should expect depreciation in
home values. As Yun notes, we are currently in a sellers’ market (prices still
increasing).
2.
"Unless sizeable supply gains occur for new and existing homes, prices and
rents will continue to exceed wages into next year and hamstring a large pool
of potential buyers trying to buy a home.” As rents and
prices increase, potential buyers will not able to save as much for a down
payment and many may become priced out of the market.
Takeaway: Inventory
of homes for sale is still well below the 6 months needed for a normal market.
Prices will continue to rise if a ‘sizeable’ supply does not enter the market.
Take advantage of the ready willing and able buyers that are still out looking
for your house.
Bottom
Line
If you are going to sell, now may be the time.
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