There’s no mistake about it. The real estate market is moving back to 2006. All of the evidence that prices will continue to rise, leading to higher prices for buyers continues to mount. At the same time, with the selection of homes available for sale dropping, many buyers are finding themselves in the uncomfortable position of having to pay more for a home they like less. Consider how each of the following indicators will impact the price you pay and the selection you have to choose from:
- Existing homes sales in September were up 10.7% when compared to last year, and have reached a seasonally adjusted rate of 5.29 million sales per year. (National Association of Realtors)
- 30-year conventional fixed rate mortgages in September averaged 4.49%, the highest rate in over two years (Compare to 3.47% last September). Experts expect rates to increase significantly next year.
- According to the NAR’s chief economist, housing affordability has fallen to a 5-year low, meaning you get less house for more money. As interest rates and prices rise, affordability will drop even further.
- Foreclosures and short-sales have dropped in the past year from 24% of all sales last year, to 14% of sales this year in September. Remember, distressed home prices have kept appreciation in check. As the number of distressed sales drop, they will have less of an impact on overall prices.
- The median price for homes is up 11.7% from last year. September was the 10th consecutive month of medial price increases.
- We have gone from a buyer’s market to a seller’s market. Nationwide, there is only a 5 month supply of homes available for sale, compared to an average 6 month supply in a normal market. As the month’s supply decreases, there will be fewer homes to choose from. With sellers less anxious to negotiate, prices will continue to rise.
- The average days on market for a home to sell dropped from 70 days last September, to 50 days this September.
Virtually every economic and market trend supports the theory that there may never be a better time to buy. Whatever it takes to secure a home now, do it!