The latest numbers are in for our real estate market. Here’s what you need to know.
I’m back with the December edition of the Hot off the Press Market Report. Winter is coming and so is another tax season. The GOP tax plan looks promising, but we need to pay attention to this more as we go into 2018. As the legislation is passed, we’ll know exactly what the ramifications are. If it’s passed as it looks, some upper-end buyers and other people who use a lot of itemized deductions, they’re going to be hit pretty hard. The vast majority of the country is going to probably get a little bit more of a tax break, and that might mean that they’ll be more ready to go ahead and purchase.
Now let’s take a look at our housing inventory. Inventory is very low right now and prices are rising. So, let’s take a look at the impact of monthly housing inventory on home prices.
If we have less than six months’ inventory, that’s a seller’s market where home prices will appreciate. If we have between six and seven months’ inventory, historically, that’s a neutral market, home prices will only appreciate with inflation. If we have greater than seven months’ inventory, that’s a buyer’s market where home prices will depreciate.
We only have to go back to 2010 and 2011 to know that we had nine months’ inventory overall and in some places more than nine months’ inventory. Prices were sliding then, but right now we’re below the six-month level of inventory. As a matter of fact, Lawrence Yun, the Chief Economist at the NAR, said in the latest report:
“Existing inventory has decreased every month on an annual basis for 29 consecutive months. Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.”
Demand is getting stronger and stronger as inventory is shrinking. As a matter of fact, if we take a look at inventory, and we take a look at October (which is the last month with available statistics for this year) I compared it to the Octobers of 2014, 2015 and 2016. The month’s supply of inventory each and every year has actually decreased, which you can see in the video above.
As more and more buyers are coming to the market there are fewer and fewer houses ready for sale. That’s the reason prices are going up. But we have to also understand, according to Bill Banfield, Vice President of Capital Markets at Quicken Loans:
“Compared to the previous year our economy continues to improve and attract homebuyers who may have been on the sidelines during the past few years. This will add additional demand to the equation.”
Well, there it is, ladies and gentlemen, it’s pretty simple. Every single month we have more and more buyers, and less and less inventory to sell. Even with limited inventory, there are more and more buyers out there. We have more buyers looking at houses even though we have a lot less houses to look at. Just this month I sold six homes for an average of $10k over the listed price. These were homes that were not selling just 30 days ago.
And if you are thinking of selling in the next three months to three years, come to our next Seller Seminar on January 20th at the Hilton Garden Inn in Fort Washington. Here I will give you great and strategic information on how to make more money and sell your home fast, stress-free, for top dollar. Imagine that. Make sure you come to it. Go to http://www.homesellingsharks.com/ to sign up or just give us a call. We look forward to hearing from you soon.