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Real Estate News & Commentary

Are We About to See a Buyer’s Market?

Harrisonstowe
Expertise:
62 Articles Written
Housing Market

A nationwide jump in home sales has been arguably the greatest driving of health in the property sector, with the late 2012 turnaround continuing on the strength of new closings. As a nationally comprehensive statistic, most analytics firms reported a quarter-over-quarter climb in the rate of purchase. While values continued to climb and home purchases sustained at a promising rate, this boom in purchase rates seemed to decelerate some by the close of Q3.

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Taking all this into account, a recent USA Today story notes that we may quickly see a shift from a seller’s market to one more favorable to buyers. As a general timeframe, most realtors seemed to be reporting a slowdown in sales around the close of summer. While this is seasonally typical, it also seems bolstered by a variety of other factors.

Chief among them seems to be the decline in affordability. As the USA Today story reported, prices have risen so drastically that they are rendering purchase unfeasible for a large portion of potential buyers. Citing figures from the National Association of Home Builders, the USA Today report states that only 69.3% of market-ready homes were affordable to families earning the median national income. This is a marked drop from the 73.7% rate recorded at the close of Q1, and the first time this figure has dipped below 70% since 2008.

To circle back to a spread of other relevant statistics, home prices in August increased on a year-over-year basis for the 18th consecutive month. Price gains posted a full 12.4% nationally average rise above August 2012, and literally every state in the Union posted a year-over-year increase in August. In tandem with this, it appears that agents and realtors widely predict home prices to rise much reduced rates throughout the upcoming months.

So What About Buyers?

Depending on economic performance through Q1 2014, we might see an evening off (or gentle decrease), in home prices. The impacts from this are multifaceted, but not necessarily negative. The combination of elevated prices and climbing interest rates have caused certain homebuyers to shy away from closing on new property, which might cause problems for property investors and those holding real-estate backed funds.

However, it could also cause a general easing in property values, which might result in decreases that are gentle enough to encourage shy buyers back to the field. This pattern could ultimately mark the beginning of stability in the housing sector. If gradual rises and stabilizations in real estate values match similar inclinations among buyers, then we could see the housing market reach that fabled plateau. Considering how wary many prospective buyers have been about a second bubble, seeing value gains curb could be the incentive conservative speculators need.

Related: Images_of_Money

By Harrisonstowe
    Bruce Specter
    Replied over 7 years ago
    Depending on your market and the price bracket, a buyer’s market is already upon us. With the continued softening of appreciation through all the hot markets (a number of markets throughout the country have always been and continue to be stable) as well as additional inventory coming to market as banks rush to get foreclosures to market and short sales wrapped up, are the ingredients for a buyers market. The lower end price brackets still see brisk movement, with investors still involved looking to uncover missed gems. Flips still play a big part here (we will entertain flips of less than 90 days seasoning). The mid and upper end markets are seeing concessions, even contingencies, as increased home values have freed many from the shackles of negative equity in turn creating mobility that has been missing since the Great Heist. Combine this with interest rates staying in the 5% range at least through 2014, compelling buyers and sellers to the market as the aforementioned mobility factor filters through. I also see a significant trend in personal austerity, meaning a growing number of potential home buyers living well within their means. The new cool is what you’re not paying for a mortgage! I whole-heartedly applaud this latest version with “Keeping up with the Jones”! There will always be buyer and seller opportunity in the opposing market. That being said, I do see a return to a new normal.
    Bruce Specter
    Replied over 7 years ago
    Depending on your market and the price bracket, a buyer’s market is already upon us. With the continued softening of appreciation through all the hot markets (a number of markets throughout the country have always been and continue to be stable) as well as additional inventory coming to market as banks rush to get foreclosures to market and short sales wrapped up, are the ingredients for a buyers market. The lower end price brackets still see brisk movement, with investors still involved looking to uncover missed gems. Flips still play a big part here (we will entertain flips of less than 90 days seasoning). The mid and upper end markets are seeing concessions, even contingencies, as increased home values have freed many from the shackles of negative equity in turn creating mobility that has been missing since the Great Heist. Combine this with interest rates staying in the 5% range at least through 2014, compelling buyers and sellers to the market as the aforementioned mobility factor filters through. I also see a significant trend in personal austerity, meaning a growing number of potential home buyers living well within their means. The new cool is what you’re not paying for a mortgage! I whole-heartedly applaud this latest version with “Keeping up with the Jones”! There will always be buyer and seller opportunity in the opposing market. That being said, I do see a return to a new normal. Reply Report comment
    Dennis
    Replied over 7 years ago
    If they keep building townhouses and apartments in Philly, it is not only going to be a buyers market, but a renters market. God help those who used Formica!

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