Add one part shrinking inventory, two parts increased home sales, and you’ve got a recipe for a hot housing market. For four years, the housing industry has dragged down the U.S. economy. But now, after ten months of continual rise in housing prices, the housing industry is finally heating up.
In states like Wisconsin, increase in sales volume and a higher median sale price herald a revived housing market. Experts’ expectations for the first quarter of 2012 have so far been greatly exceeded. The pace of sales is approaching where it was before the housing market crash in 2008, says Kevin King of the South Central Wisconsin MLS.
Particular sectors of the housing market appear to be improving more rapidly than others. Homes in the $150,000 to $250,000 range, which appeal mostly to two-income families, are seeing much more action than homes on the higher end of the market. Starter homes are also getting a lot of attention, as the numbers of first-time homebuyers are finally financially ready to buy a home. One buyer lost bids against competing buyers three times for homes priced around $200,000. And, as the number of available homes dwindles, prices of those homes will rise.
According to the Orange County Register, the listing inventory of homes for sale in California is the lowest it’s been in seven years, with new homes listed having an expected market time of just 47 days. Since June of the previous year, housing inventory has declined 50 percent in Orange County. Such drastically reduced inventory, combined with increased demand and overall economic improvement have stimulated the long-sluggish housing market.
The improving market conditions are expected to continue the upward trend, with the number of distressed properties in the market preventing housing prices from becoming inflated. With a shortage of homes for sale, prices are expected to increase through 2013. Realtors say they are witnessing a cross-country recovery, as home buyers and sellers rally amid favorable market conditions.
Realtors do caution buyers against waiting too long before they take advantage of current bottoming prices and record low mortgage rates. According to a national survey by RE/Max, nearly 70 percent of realtors agree that the housing market is stabilizing and that prices are on their way up.
On a final positive note, home buyers are looking more favorably at distressed properties, according to the RE/Max survey. The money saved on an attractive bargain can easily compensate the amount needed to fix up a bank-owned property that may have had little care over recent months.
Inventory Dwindling As Home Sales Heat Up.