Sellers have been in the driver’s seat for the last two years, but this year is shaping up to be even better for several reasons:
Reason No. 1: Mortgage rates are still lowIt’s all about rates, baby. Low mortgage rates translate to lower monthly costs. Lower costs entice buyers, which is good for sellers.
Reason No. 2: Job markets are strengthening. As unemployment decreases and wages (finally) increase, consumer confidence will climb. Increased confidence will spur buyers to jump into the market—which is, you guessed it—more good news for sellers.
Reason No. 3: Home prices are rising. Lower inventory and greater demand have pushed up home prices. The median existing-home price in November 2016 was $234,900, up 6.8% from November 2015, when it was $220,000, according to the NAR.
Reason No. 4: Inventory is shrinking. Remember in Econ 101, when you learned that low supply and high demand lead to rising prices? The same is true—in spades—for residential real estate. When inventory shrinks, available homes become more valuable.
The National Association of REALTORS’ (NAR) Chief Economist Lawrence Yun recently commented on the inventory:
“Last month’s dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market.
Demand is easily outstripping supply in most of the country and it’s stymieing many prospective buyers from finding a home to purchase”.
The latest Existing Home Sales Report shows that there is currently a 4.2-month supply of homes for sale. This remains lower than the 6-month supply necessary for a normal market, and 4.6% lower than a year ago.
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The chart below details the year-over-year inventory shortages experienced over the last 12 months:
Published on 2017-06-15 14:20:23
