Market Watch
The national landscape for real estate has changed over the course of this year. Clearly 2013 has been an excellent year for real estate sales nationwide. Nationally year-to-date unit sales through September climbed 15%, while statewide units were up 14% and our local market increased 16%. Although these numbers are excellent the market is experiencing some other changes.
The mix of buyers has changed over the past few years. Investors represented about 34% of all buyers so far this year, while the percentage of first time buyers is fewer than 30%, a significant drop from historical levels, which have been closer to 40%. This relatively high percentage of investor buyers suggests that professional investors still feel real estate is a good investment. First time buyers have not declined because they don’t want to own their own home. Contrary to some articles you may have seen, the desire to own a home continues to be a goal across age groups. Survey after survey shows that if buyers have the ability to own a home they have a strong preference for owning vs. renting. There are two very clear reasons that the number of first time buyers has declined. One reason is the difficulty in obtaining mortgage loans. Increased banking regulations have made borrowing money an onerous process. Lenders have money and want to lend, unfortunately they are required to comply with expensive regulations making the entire process more cumbersome for everyone.
One additional positive in the housing market is the continued improvement in homeowner equity. Short sales and foreclosures have unfortunately been a significant portion of the market the past few years. With improved prices and more buyers the number of homes “underwater” has declined significantly. Current estimates suggest that over 8 million homeowners who currently owe more than their home is worth will be in a positive equity situation over the next 15 months.
Strong demand from investors, a strong desire to own vs. rent, and an improved equity situation all suggest that housing will stay strong for the foreseeable future.
Best wishes for the upcoming holiday season and please let me know if I can help with any of your or your friends housing needs. You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com
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