Hi, ladies and gentlemen, this is Diane Cardano with part 1 of my “Hot off the Press” Real Estate Market Report for January 2014. As you know, every single month I break down the news in a way that is easy to understand and keep you “in the know” when it comes to the latest trends in Real Estate.
First of all, it is now 2014 and I think we’re going to have a fabulous year. As a matter of fact, I think we’re going to have a better year than most people are even projecting. Frank Nothaft, the chief economist at Freddie Mac put it this way, “We expect single‐family home sales and housing starts to be at the highest level since 2007”.
We know 2013 was pretty good in Real Estate, But I believe 2014 is going to blow those numbers away.
Let’s talk about Prices. Prices are important; where are they going? What’s happening?
Well, ladies and gentlemen, the new FHFA report just came out for the end of 2013; I broke it up for you regionally. You can see that though prices are going up in the country and they’re going up rather significantly, they’re not going up at the same levels in every single place in the country. In fact the Middle Atlantic, where we are, is moving at the slowest rate in the country. That is actually a good thing because it means our market has stabilized more quickly and has placed us in a pricing model that effectively makes it both a good time to buy and sell.
That means if you were waiting to move into a bigger home or downsize to a smaller one, you will be able to find many people looking to buy your home and many people looking to sell you the home of your dreams. And if you are a first time buyer, you have competitive interest rates and a competitive marketplace to shop in. We’re in a very solid place as far as prices are concerned. But we are also in an amazingly good place as far as sales are concerned; we’re coming back to a much more normalized market. In fact, that is the word we have been waiting to use for a long time. NORMAL.
Now let’s go back to the FHFA and look at it in a different way. Instead of breaking it down by region let’s break down prices by state. The dark green means things are going really, really well, and what we can see here very easily is that in the vast majority of the country things are going well. Normal appreciation is about 3.6 percent historically, so the dark green numbers are all the states that have appreciation over historic numbers.
But, you may ask, “Isn’t it better to have the 12% price growth we saw last year? Isn’t growth of only 4% a bad thing?”
Actually no, it is not. As Dr. Stan Humphries, the Chief Economist at Zillow said, “the conditions that led to the robust appreciation experienced in 2013, including historically low mortgage interest rates, high affordability, low inventory, and high demand, are waning. In their place we’re beginning to see more inventory and rising mortgage rates, which will lead to further normalization in the market going forward.”
We’re coming off that flying up, crashing down, and flying up again. We’re getting off that crazy seesaw ride and moving to a more normalized market. Trust me folks, that is better for everyone.
What does Normal look like?
If we take a look at NARS’ last existing home sales report, we can see that inventory is getting back to normal numbers. We’re in that number of five to six months, which means that in five to six months we'll get a normalized market. Under five months, there are not enough houses for sale, and prices go up dramatically like what happened in January, February, and March. More than six months means there’s too many houses for sale, which occurred back a couple of years ago when prices started to drop pretty dramatically.
And part of the reason we had tremendous acceleration at the beginning of the year, we were way short in inventory. People were fighting over the houses that were for sale. But as the year went on, we got more and more inventory compared to the year before. And for the last two months we’ve actually had more inventory in September and October of 2013 than we did in September and October of 2012, so things are becoming more normalized. When and demand becomes more normalized, prices level out; and the appreciation is 3.6 percent.
Next I want to discuss a major piece of news that is facing so many people today, the rising Rental crisis.
Many people used to think that renting is less expensive than purchasing. That is simply not true. In fact according to Shaun Donovan, Secretary of the Housing & Urban Development Agency, “We are in the midst of the worst rental affordability crisis that this country has known."
This image shows the Increase in the cost of renting by showing you the Median asking Rent from 1988 to the end of 2012. Just look at that trend.
At the same time, Christopher Herbert, Research Director at the Joint Center for Housing Studies at Harvard University, revealed that cost of renting is about to increase significantly, saying, “Well, I think it’s a basic question of supply and demand. When you have that many more renters coming into the market looking for housing, and the supply of housing isn’t responding as quickly as it might, that’s going to push rents up, even if incomes are low.”
The opinion of the 100+ experts who participate in the Home Price Expectation Survey is that home values will increase by approximately 4% over the next twelve months and by over 25% over the next five years. If we break the predictions down by classification you can see that even the ultra-conservative thinking of market Bears see nearly 17 percent appreciation by 2018. That is an incredible return on your investment dollars, as opposed to helping your landlord feather his nest with your hard earned cash.
The Bottom line is that the housing market in our area is doing exceptionally well and with our team of expert advisors on your side. NOW is the time to enter the market whether you are buying or selling. We will help you face the market armed with knowledge and backed by a team dedicated to making your experience stress free and efficient. Most importantly, you will have the best negotiator in the field… me. The pit bull, at your side, making sure you get the best deal possible.
Well, that’s it for our Market Report #1 for January. Remember to check back regularly to stay current and ahead of your competition. To really get an advantage, don’t forget our monthly Seller seminars! The next one is coming up on Thursday January 16th at the Abington Free Library on Old York Road in Abington PA IT starts at 6:30pm sharp, reserve your seat today. Go to www.HomeSellingSharks.comand register today!
