Real Estate is Finally Bouncing Back!

  

   

Sales of previously owned homes rose in nearly every region of the country in January, reducing the inventory of homes on the market.  With the supply of homes dropping, values are rising and a seller's market is starting to materialize across the country.  Heightened buyer interest and low interest rates are also helping to fuel the uptick. 

Housing inventory fell almost 5 percent in January which looks optimistic, but many sellers are holding off listing their homes for sale because they are still drastically underwater on their mortgages.  The signs are definitely optimistic but because of negative equity/underwater mortgages and shadow inventory it is wise to remain cautiously optimistic. 

Some of the indications that Spring is in the air for the housing market:

• Sales pace is up 9% over last January's pace and ranks as the second highest rate of sales since November 2009 when the homebuyer tax credit was about it expire.
• Lowest supply of homes since December 1999.
• Buyer traffic is up 40% over a year ago.
• Home prices rose in nearly 90 percent of the largest metropolitan areas in the fourth quarter of 2012.
• Between rising demand and limited supply, home prices are making real gains for the first time since 2006 and they are expected to keep climbing over the next few years. 
• Distressed home sales are down 7 percent from a year ago.
• Although prices are starting to rise, they are still low, and combined with low interest rates, homes are more affordable than they've been in 40 years.

It's been a long six years since prices started to collapse but it seems that real estate is finally beginning to spring back.  Low mortgage rates and pent-up demand have encouraged buyers to jump into the market.  Economists agree that the bottom is behind us and the five year outlook is solid, but caution that 2013-14 are going to be transitional years.  The market is improving but it is not yet totally healed.   Finally some good news!