The National Association of Realtors recently reported something that has been quite apparent as of late. The low inventory, which we reported in a past blog, is causing properties to fly off the market especially in areas such as Boston where demand for property and the range of buyers remain strong. This has led many to question whether we are still in a so-called buyers market. The economic recession and housing downturn caused many to believe this were the case as both home sales and prices crashed. However, here on our local level, this has certainly changed.
NAR shared that for January of 2013, the number of homes throughout the country fell by 4.9% to 1.74 million. It had not been since 1999 when a number even close to this figure was the status quo, as back then there were just 1.71 million homes on the market. This is quite a serious drop in the available inventory when you consider that just two years ago during this time there were 2.91 million properties available nationwide.
With the economy turning around, the job market improving, and overall confidence amongst the populace growing, the pool of prospective buyers has skyrocketed. It is their desire to purchase property that still has not reached a peak in terms of value combined with the consensus that real estate is once again proving to be a trustworthy long-term investment. If this trend of additional buyers grows while inventory is to remain roughly at its level, then with the current accelerated pace of sales, it would only take 4.2 months to sell the total supply of properties on the market today. Astonishingly enough, in just one year this estimated time span is down a great deal from the 6.2 months it would have taken to sell the former inventory back at this same time last year.
While inventory levels tend to increase in the Spring, it nonetheless is likely to be a Spring market with less choice for buyers than in years past. This is only a good thing for sellers. In a past blog we discussed how properties average days on the market have decreased and many are selling for at or even above their original asking price. Goldman Sachs are even predicting that home sales could rise to 5.2 million units this year, a boost of 12% over 2012s numbers. So with less inventory yet greater sales projections, it is evident that properties are no longer sitting on the market and receiving zero interest. In fact, investors are also being aggressive lately and have been buying up properties that are selling for less than their replacement cost. Furthermore, household formation is improving which suggests a rising demand to continue in the coming years. This, along with the record-low mortgage rates and home prices still at a respectable level all depict this as a wonderful time to be a seller full of confidence knowing that buyers are abundant.
More Information: The Wall Street Journal