According to The National Association of Realtors it’s becoming a seller’s market, something that buyers in many parts of the United States have know for a while now.
According to several statistics the number of homes listed for sale in January fell by 4.9%, leaving around 1.74 million properties on the market. That’s the lowest since December of 1999, when there were 1.71 million homes on the market.
This is good news for sellers because that means home prices are also on the rise. In fact, home sales rose by 0.4% in January, to an annual rate of 4.92 million units. While that might not seem like a large increase, it is still up 9.1% from one year ago.
The reason for this price increase is that there is an increasing amount of buyers all pursuing the same supply of homes. If the trend holds, prices will keep going up.
While inventories typically increase in the spring, the Realtors’ group has expressed growing concerns that sales volumes are being held back by the lack of choice. This is good news for homeowners who have watched home prices drop over the last six years, but it’s bad news for buyers—and for anyone that makes their living selling real estate.
California, Arizona, and other markets have experienece the most dramatic inventory declines. These cities have large numbers of underwater borrowers—people who owe more than their homes are worth—while many others may have equity but aren’t willing to sell because prices have fallen so far.
Investors have also been aggressive in buying up properties that are selling for less than their replacement cost.
Home sales could rise to 5.2 million units this year, an increase of nearly 12% from last year, according to economists at Goldman Sachs. They base their forecast on household formation and demographics, which both suggest rising demand for housing in the coming years, and affordability measures such as mortgage rates and home prices.
But the economists note that there’s a considerable amount of uncertainty that could make those targets hard to hit, particularly if there’s nothing for would-be buyers to purchase.
– Wall Street Journal