The Real Estate Market Is Poised To “Spring” Back
In five short years, we have experienced the highs and lows of the real estate market. The National U.S. Home Price Index peaked during second quarter 2006 and by the end of 2011, it had plummeted 33.8 percent to a record low. During that time, five million Americans experienced short sales or foreclosures and approximately 14 million more ended up with negative equity in their properties. Everyone seems to have felt the pain and the economic recovery has been slow.
Slow, but not nonexistent, as recent indicators are signaling improvement. There is no denying that the economy in general seems to be improving. Employment figures are more positive and investors are becoming more confident. Economic improvement has traditionally been a strong portend of increased housing demand. For current homeowners, this means that after bottoming out, home prices may begin rebounding by spring 2013, perhaps earlier.
For consumers interested in purchasing a property, the time to buy is now. Mortgage interest rates are near record lows and home prices have drastically declined. First home buyers can have their pick of condos and homes, many priced below market value. In January, the Housing Affordability Index was 206, meaning that the typical American household had more than twice the income needed to purchase a median-priced home with conventional mortgage assistance.
Foreclosed properties have been largely responsible for the decline in home prices and though most of them have been concentrated in other states, we have seen our fair share in Vermont. Sales of distressed properties and the prices of vacant condos and homes awaiting sale decrease values of nearby properties. During 2011, American home prices declined 4.7 percent overall but when distressed sales were excluded, prices declined only 0.9 percent.
What this means is that home buyers can find great bargains, especially if they are interested in a short sale or foreclosed property. For sellers, it means that listing prices are not substantially worsening. In fact, on a month-over-month basis, housing prices increased 0.2 percent nationally during December and 0.7 percent during January.
Though the market has a way to go, spring has brought the winds of change. The market bottom seems to be in sight and it will be relatively insignificant. Buyers should take advantage of low listing prices and interest rates and sellers should rest assured that the worst is behind us. Whichever side of the fence you fall on, we are ready to help you achieve your goals!