Sales are up for the fist time in 2 years:
This does not mean that prices are climbing: although in some areas, there have been very small increases in the past few months. Rather, the increase of demand for homes in the spring market this year has caused inventory of residential properties to move at a faster rate and greater volume than in previous months.
What does this mean for the average seller? Well, a seller can expect more buyers through their door right now than they would have seen in January or February.
This can and -in many cases- does translate into a faster sale. Since less days on the market means less negotiation power for buyers (particularly in traditional sales), sellers are generally taking less of a reduction in price in order to get their homes sold.
Interest rates still fantastic!:
Even though rates climbed back into the 5% range this week, these rates are still at historic lows. In December and January, we saw rates at this same level, and it was the beginning of a nice up-tick in sales in our region.
If rates stay low, we may see an extension of the Spring market into the summer as buyers -many of whom are first-timers- continue to jump into the market.
Since first time buyers oftentimes are not yet parents; parents tend to purchase before the summer months; they should be more apt to buy when others are on family vacations or worrying about getting ready for the new school year.
8K First time homebuyer incentive drives sales:
Speaking of first-time buyers, the incentive set forth by the Obama plan has had tangible results in the first-time homebuyer market. This stimulus allows first time homebuyers (loosely defined) to receive a tax credit of $8,000 if they purchase before Dec.1 of this year.
The overwhelming majority of the activity in the marketplace has been at the range most affordable for this demographic: the 100, 200 and 300K range. The feeling of most first -time buyers is that the market has corrected significantly enough that even if it slides down more, the rates are too good to turn down right now, and the remaining correction left in the market will not be as steep as the losses already incurred by the people who are selling today.
Foreclosures are still to come:
That said, the market is still home to many more homes that will go into foreclosure. The end of the foreclosure boom will signal the true stabilization (or bottom) of the market.
Historically, after a bust period, a “flat” period or a leveling off of prices for a time follows, so don’t expect prices to bounce right back up to where they were three years ago: Consumer confidence will have to come around, rates will still have to be great, and credit scores will have to be mended.