Homes are flying off the shelves this spring, as demand
rises and supply continues to drop. Home sales jumped nearly 9 percent in March
compared with March 2016, even as the number of homes for sale plunged 13
percent, according to Redfin, a national real estate firm.
A sizzling spring for market sales is keeping optimism
high even though supply continues to hit disturbing lows leaving sellers in the
hot seat facing frustrated buyers. According to Redfin’s chief economist, Nela
Richardson, “The combination of low inventory, high prices and strong
competition will continually challenge first-time buyers this year and they are
the cornerstone of the housing market,” as reported by CNBC. In a cyclical
effect, shockingly low inventory levels are pushing up home prices so much that
even rising incomes are unable to brace the climb, forcing affordability down.
Housingwire.com explains, “Rising home prices combined with higher interest
rates caused affordability to decrease in March.” And, although Freddie Mac’s chief
economist, Sean Becketti, asserts, “For-sale housing inventory, especially
starter homes, is currently at its lowest level in over ten years,” CNBC
affirms that, “Record high prices in some local markets are not thwarting
hungry buyers, as they rush to take advantage of the lowest mortgage rates of
the year.”
Interestingly, Freddie Mac offers four key reasons for the ongoing squeeze on supply levels and, ironically, the first of these is fear itself as Housingwire.com explains, "Homeowners are hesitant to put their home on the market as they are unsure if they will be able to find a new home in their budget once they sell theirs." Also making the list of top logic are issues like rising mortgage rates as homeowners stick to their current lower rates, home prices sitting at values just short of what is owed, and a slip in housing starts, nearly 7 percent in March, which experts are dubbing "lackluster growth" that "won't be enough to meet the rising demand," recaps real estate reporter, Kelsey Ramirez. All highs and lows considered, market meanderers are left to bend around the whys in an effort to find some balance on the homeownership ride.
Source - California Association of Realtors March 2017
Courtesy of JMJ Financial Group
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