According to a recent CNBC article, The National Association of Realtors reported that the housing market was still underperforming in February. There are currently just less than 1.9 million homes for sale, which is less than last year and "well below current demand." Whereas the number of listings typically increases by 6 percent from January to February, the number of listings this year increased by less than 2 percent. Even foreclosures are down, reaching their lowest level last month in 8.5 years. Lack of supply results in increased prices: prices have risen 7.5 percent year over year, as the median home sale price as of Feburary was $202,600. Lawrence Yun, Chief Economist for the Realtors, considers these price gains "unhealthy." So, what's behind this persistently low supply?- Larger builders are gaining share over smaller builders, who don't have access to credit. Larger builders tend to cater more to higher-end buyers, not first-time homeowners, pricing this key demographic out of the market.
- Relatedly, many people are choosing to rent instead of buy. For this reason, rental prices have increased sustainability and show no signs of stopping. In turn, renters are struggling to save enough money for a down payment.
- Buyers are low on cash and are highly concerned with value following the recession. They want to feel as if they are getting a good deal, which is hard to do in light of increasing prices and fewer housing options.
Peter Boockvar, managing director and Chief Market Analysis of The Lindsey Group, states that household growth and even higher rental rates will cause a nice rebound in the housing market, reaffirming that a slowdown in the pace of home price gains is much needed.
Now is a good time to sell, as sellers can take advantage of the recent price increases caused by the limited supply of listings. Visit my website and contact me to see how I can help. I am a full time Realtor with a lifetime of experience serving sellers (and buyers!) in Ohio.
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