If you are thinking of selling your home, this current market may be the best opportunity you see for quite some time. In 2012 home prices in many areas of the country have risen steadily. As the foreclosure inventory drops, pressure on home values declines as well, allowing home prices to rise.
Prices increase nearly 4 percent
In fact, most of the major house price indices report that prices are going up, including the monthly Case-Shiller report and the Federal Housing Finance Agency, which recently reported year-over-year price increases of nearly 4 percent. “Potential home buyers should be encouraged by the positive momentum in home prices, permitting and employment that is increasingly evident in not just isolated housing markets, but a broadening swath of the country,” according to Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.
Doug Duncan, senior vice president and chief economist of Fannie Mae said “Combined with consumers’ growing mortgage rate and rental price increase expectations, the positive home price outlook could incentivize those waiting on the sidelines of the housing market to buy a home sooner rather than later and thus support continued housing acceleration.”
Realtors Report Quick Sales, Multiple Offers and Continuing Credit and Appraisal Issues
As a word of caution to anyone waiting to put their home on the market in hopes that values will rise this spring or summer, you might have to wait a little longer than that. According to a recent NAR survey, Realtors in most areas of the country reported multiple offers, quick sales and appraisal problems. Thirty-four percent of Realtors reported a problem with an appraisal in the past 3 months (same as in September). Approximately 10 percent of the respondents reported that appraisal problems led to contract cancellation; about 10 percent reported a delay as a result of an appraisal problem, and almost 15 percent reported that the appraisal problems led to lower prices.
So while the rule of supply and demand seems to be working the truth of the matter is when appraisers have no sales data to support the rising prices, lenders can’t make mortgage loans based on the higher prices. It simply takes longer for the appraisal data to catch up with rising values.
What could slow things down and cause a stall in the housing recovery? Many analysts believe there is a shadow inventory of foreclosures yet to hit the market. It is logical to assume that once this shadow inventory begins to hit the market, prices may begin to drop. The good news is CoreLogic’s monthly report for October showed the residential shadow inventory of distressed homes continuing to shrink. The improvement is across all metrics – number of units, month’s supply, dollar volume and transition rates. The inventory as of October was 7.2 month supply at the current absorption rate.
Consider the inventory of existing homes, which totaled more than 4 million at its peak in July 2007, according to the National Association of Realtors. Since then, existing home inventory is down 47 percent, now standing at 2.14 million as of October 2012. In terms of months’ supply—the period of time required to sell through all inventory at current sales rates—the existing home supply has fallen from more than 12 months’ supply in July 2010, to just 5.4 months’ supply in October 2012.
Right time to Sell?
If you are considering selling, this may indeed be the best time while inventories are down, buyers are active and the shadow inventory is still in the shadows.
Source: US News, Mortgage Daily News, Realtor.org, CBS News
Tags: Selling, buyers, home, housing, housing market, housing prices, NAR, Housing Recovery, CoreLogic, appraisal, distressed sales, housing inventory
Michelle Castle provides mortgage loans to all of North Texas and Southern Oklahoma. Call Michelle Castle at (903) 892-1998 if you are looking for a home loan in North Texas and Southern Oklahoma. Visit Michelle’s website and apply for a loan.