Is Real Estate On A Real Rebound?
We have recently received good news on new home starts and sales activity. The tax credit programs have had a very positive effect on the national Real Estate market. National news aside, how can you determine condition of the local market? Listed below are several factors to help you evaluate the temperature of your Real Estate market.
1 . Pending Home Sales: Nationally, this index had increased over 17% over last year. Much of Connecticut has seen similar increase. Pending sales can predict the direction of the market. The homebuyer tax credit has been a large factor in year to date sales.
2 . New and Existing Home Sales: What’s happening around town? Are builders building? New home sales nationally have been weak. Locally, new construction activity appears to be on an upswing. The sounds of hammers and saws are good for all of us. Existing home sales have increased over the past twelve months.
3 . Home Inventory: Nationally, new and existing home inventories are sufficient to meet nine months of demand. On a local basis, knowing how many homes are on the market in your community and how many homes sell in a year? This will give you an idea of the inventory. As a seller, a large inventory signals a lot of competition. For buyers, a large inventory can mean buying opportunities.
4 . Interest Rates: Buyers and sellers need to know what is going on in the mortgage market. Credit requirements have tightened, but rates are still very attractive. Low rates cannot by themselves fix a housing slump, but housing affordability improves when rates remain low. Often, a rate increase can spur activity among fence sitters.
5 . The Job Market: High unemployment rates have a negative impact on Real Estate. People who lack confidence in their employment future will usually postpone home purchasing decisions. The quality and quantity of increases in employment numbers will impact our Real estate market for the next several years.
6 . REO Inventory: Bank owned property (Real Estate Owned) also affects national and local markets. In some markets, foreclosures represent a high percentage of sales. This tends to be a drag on prices. Programs to help delinquent borrowers have had mixed results. REO property is presently and will continue to be a factor in most markets.
So, what’s happening in our market? We are seeing increases in sales. We are seeing the number of new deposits reaching a more balanced level with the number of new listings. More than ever it is critical to be informed buyers and sellers. There are many resources available to everyone. Informed buyers and sellers will prosper in this market.
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