I am frequently asked, as you might imagine, how the housing market is doing. Usually, that is followed up with where do I think the market is headed. Today I am going to focus on the second question and look into the future.
Generally, I have been more bearish on the market than the media, the government and the National Association of Realtors. While it may not help my immediate business, it's my job to offer my honest opinion. In fact, recently, I told a client that I thought the St Louis metro market was as much as a year from seeing real improvement in home values as I felt like we were just reaching the bottom of the downward trend. Maybe I was wrong.
When we read or hear stories, they are often based on opinion or spin. The stories I have read lately, the ones I believe anyway, are based on statistics and laid out as honestly and simply as possible. One of those stories lays out basic statistics and illustrates some good news. The stats can be found here at the Department of Numbers website: http://www.deptofnumbers.com/asking-prices/missouri/st-louis/.
There are two very good indicators of the health of the real estate market, inventory and prices. Where are they currently and how are they trending. Finally, we are seeing improvement in inventories and a more moderate improvement in sale prices. This indicates to me that the bottom of the curve may be fast approaching, maybe as much as 12 months ahead of where I expected.
If you check out the link to the Department of Numbers link above, you will see that single family and condo listing inventories are at a 4 year low. In fact, the year over year inventories are 10.9% lower as of March 19, 2012. Remember, lower inventories means buyers have fewer options and they are more willing to pay asking price or even a premium for what they want. This is especially true as the spring season hits it's stride and the buyer pool increases. We will begin to see properties snatched up more quickly than in recent history. As a seller, are you in a position to take advantage of this trend?
Let's move to sale prices. If you again refer to the Department of Numbers link, you will see that sale prices are still dropping on a year over year basis. You might wonder how I can see that as a good sign. The sign I like is not the current but the trend. The price drops are slowing and have been slowing for some months. Now that we recognize this early, it allows you to be in the drivers seat when making your next home purchase. Are you in a position to buy now before prices even out in order to find the best deal?
The four focus items you should take away from my comments are:
- Interest rates are at all time lows and possibly poised to go higher,
especially if inflation kicks in.
- Inventories are at a 4 year low.
- Sale price drops are slowing.
- Financing is loosening for buyers.
If you are considering buying, let's talk about whether it makes sense for you to jump in now or risk being behind the curve as prices start to rise.
If you are considering selling, let's talk about how to position your home to sell quickly, especially if you have been on the sidelines afraid that buyers were going to beat you up on price. Is now the balance between a decent sale price and leveraging a low buying price on your next home?
Call me and let's talk!
Warmest regards,
Dan
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