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Housing Market: Increasing Price and Decreasing Supply…

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You all are very much aware of the fact that Real Estate has turned around the corner long back and started to do better. But how many of you know that things have changed so much since last few months that prices are going upwards and supply of homes have gone down to push the prices more and more. I keep posted about the gradual increase in prices with support of analyst report. Here are few more to add to it,

Housing’s Spring Bloom ‘Stuck’ Due to Short Supply – CNN Money
Like everything else in the spring, housing supply is supposed to grow. That is because warmer weather and the convenience for families of moving during the summer make spring the busiest home-buying season historically. That is not the case this year.

Home sales have been “stuck,” according to Lawrence Yun, chief economist for the National Association of Realtors, because there is just not much out there to buy. “If I am underwater in my equity and now suddenly I’m not, but I’m up 5 percent and the market around me is appreciating 6,7,8,9, 10 percent, why don’t I wait and perhaps get a 10 percent return on my investment, not a 5 percent return,” noted Richard Smith, CEO of Realogy Holdings.

Inventories are tightest on the low end of the market, where investors came in and bought most of the distressed properties and are now holding them as single-family rentals. There is about a four-month supply of homes priced under $100,000, while there is around a twelve-month supply of homes priced over $500,000. That’s why sales of those low-end homes are down 16 percent from a year ago, and sales of higher-end homes are up 25 percent, according to the Realtors.

The number of homes listed for sale increased by just 1.6 percent in March from February, according to Realtors, but supplies are still 17 percent below where they were a year ago. Realtors usually see listings swell by about 100,000 in March, but this year they saw just 30,000 more. They are hoping to see 200,000 to 300,000 more in April, but that seems unlikely, given potential seller reaction to the recent fast price appreciation in the market.

Weak supplies are pushing home prices up far faster than wage growth, which is keeping first-time buyers especially on the sidelines. These buyers made up just 30 percent of the market in March, compared to the historical norm of 40-45 percent. They just can’t compete with all cash investors.

Barclays: Home Prices to Rise 10% This Year
Home prices will likely climb 10 percent in 2013 and 8 percent in 2014, according to Barclays analyst Stephen Kim, who recently upgraded his view of the housing market from neutral to positive.

Kim told The Wall Street Journal recently that low mortgage rates are helping to make buying more affordable than renting in many markets.

About “18 months ago, the industry was nothing much to look at: dilapidated foreclosures were flooding the market, home equity had suffered the worst retrenchment in a generation, and housing starts and sentiment were far below historic troughs levels,” Kim notes. “But after stabilizing in 2012, both new and existing home prices are now accelerating much more rapidly than in the 1990s cycle.”

In conclusion, Houston housing market is much aggressive and prices are going up more than 10% in many areas. So I want to caution the prospective buyers to wake up and start their search even earlier so they won’t lose out on the deals. At same time I like to say, you don’t pay more its because the house is listed for the price seller wanted. Sellers please work with a Realtor to list your house in the market in right price so that market can yield good buyers. High priced house never always attracts buyers even the market is sellers market.

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