Housing Market Heating Up: Five Contributing Factors

Housing Market Heating Up

This Spring Could be the Best Season!

There has been talk cropping up in the media about the housing market picking up speed.  It looks like this Spring could be the best home buying season in years. This article by Morgan Brennan in Forbes magazine tells all.  

There are several reasons why this Spring is looking to be so good for thehousing market, one of which being the “elevated level of contract offers so far this year”. While February experienced a quick decrease in home sales the numbers are still higher than they were this time last year: 9.2% higher in fact.

Because of this increased demand from the buyers, inventory on the market has decreased significantly. These levels are estimated at 2.43 million homes available for sale, 19% lower than they were in February of last year.

There are five factors playing into why this upcoming Spring will see the market picking up quickly. These five factors are the weather, tight lending, a flood of foreclosures, location and jobs.

First off we have the weather. This winter was very mild and plays a big role in the strong numbers of sales occurring this year. “If it’s 30 below and snowy that doesn’t inspire people to go look at houses, but this year has been so mild that our market didn’t slow down” says a Coldwell Banker Realtor in Minnesota.  The Midwest has experienced the most sales activity this year, and it’s no coincidence that this region often suffers from the harshest winters. They clocked in at a 6.5% jump from January to February and this is a 19% increase since last year.

A concern that some are having is because of this warm weather people who would have ordinarily bought in the Spring instead bought just beforehand, pushing those sales further ahead and leaving fewer for this Spring.  However, that’s not necessarily the case. NAR predicts that sales will in fact rise another 7-10% this year so hold on tight and get ready!

The second factor is because of tight lending and rock bottom interest rates. Housing is at its most affordable but lending remains tight. This has allowed 30% of all buyers to pay in cash, a purchasing method that may, for some buyers, have more benefits than taking out a mortgage. This true especially for investors who have been using cash offers even if the seller accepts less money.

One of the challenges of buying in today’s market is the availability of credit. If possible home buyers can find a way to finance their purchases with ease then sales will continue to grow. This article “estimates 500,000 more sales would be completed this year than projected if lending standards eased even just a little bit”. This makes hard money loans and private money loans very valuable especially with people who already have equity.

The third factor for our increasing market is the newest flood of foreclosure sales. Now that the new $25 billion foreclosure settlement has been implemented the uncertainty banks have been feeling about foreclosures is subsiding. 2012 projects a 25% increase in completed foreclosures or REO’s which is about one million foreclosures or REO’s.

This doesn’t mean that there will be 25% more homes that slide into default but it does mean that these homes stalled in the “processing pipeline” from the 2010 robo-singing conflict will finally trickle down into the market. This is the year for banks to list larger percentages of their inventory.

The fourth factor contributing to our housing market is location. That’s what you hear when buying a home right? Location, location, location. Today’s current market has forced buyers and sellers alike to look at real estate on a local level. More research firms are tracking data nationally but each neighborhood is “undergoing its own micro market experience”.

The last contributing factor represented in this article is jobs, the changing unemployment rates. Whether you believe unemployment changes the market or the market changes unemployment, it’s agreed that jobs and housing are intrinsically linked.

Because of this, the more I hear about firms creating more jobs here and there throughout California, the more encouraged I am. I’m convinced that Real Estate in California is about to skyrocket.

For the entire article that this blog is based on click this link. 

If you are a buyer who is considering entering the market while it’s heating up and need a fast easy loan, Hard Money loans might be your answer:http://www.sunpacmortgage.com/Private-hard-money

Lynn Tardibuono – Flipper Chick- Real Estate Agent and Co-Owner of Sun Pacific Mortgage and Real Estate.  Serving Sonoma County since 1988.  Her number is (707)523-2099 and you can also visit the website at http://www.sunpacmortgage.com