Things in the real estate world are moving up, up, up! Not only have home values continued to increase across the nation, but buyer confidence and housing demand has also gotten a boost in recent months. Not surprisingly, the lack of available real estate inventory has pushed home prices (and rent prices) to levels not seen in quite some time. These changes have all contributed to a rapidly shifting real estate landscape in which buyers are scrambling for homes, landlords are experiencing a rental boom and more and more Americans are feeling good about entering the market.
According to the April "Outlook Survey" from Prudential Real Estate, pessimism regarding home buying is beginning to subside. This was evident in the survey's findings, which revealed that 63 percent of respondents claiming they now feel more confident about buying compared to their parents' generation. Among the respondents aged 25 to 34, 73 percent revealed that at least "somewhat confident" regarding the recovering real estate market.
As if that weren't a large enough improvement, a whopping 87 percent of respondents agreed that Americans considering purchasing a home should do so now, while mortgage rates and home prices are still very reasonable. Now that we're hearing reports of interest rates ticking upward, even more buyers may be racing to lock in a low rate now as compared to last month, but it's still too soon to say for sure. The one thing that seems to be holding back a true housing boom is the apparent lack of inventory.
A recent report from the National Association of Realtors revealed that the number of available homes for sale is at the lowest level it has been since 1999. Because the pickings are so slim, and the homes that are on the market don't seem to stick around long, buyer demand has risen significantly.
New York Times contributor, Catherine Rampell, explained in an article on March 20th that, "As desirable as the long-awaited improvement may be, the unusually low level of homes for sale is creating widespread problems for buyers and sellers alike, leading to bidding wars and bubble like price jumps in places that not long ago were suffering from major declines."
Rampell backed up her comments by pulling data from real estate site Zillow, which reported that the median home price in Sacramento, CA shot up 15 percent - a noteworthy change due to the fact that Sacramento was an area hit hard by the Great Recession and housing crisis.
Other metros that once suffered so greatly in the wake of the housing downturn are also experiencing significant price gains. Recent information from Standard and Poor's Case-Shiller Index indicates that nationwide - through 2012 - home sales prices went up by 7.3 percent. The trend was especially evident in Dallas, with sales up 6.5 percent; Tampa, where sales rose 7.2 percent; and Denver, where sales were up by 8.5 percent.
Because demand has reached new highs once again, construction companies that were once reduced to skeleton crews are hiring once again and are jumping into the fray. According to an April report from the federal government, housing permits, while still below their peak, surged in February to their highest level since June 2008. This uptick signifies an increase of almost 34 percent from the same period in 2012.
Where are Rents Headed?
As demand for housing continues to increase, more and more people are finding themselves at the mercy of renting until more buying opportunities open up. Not surprisingly, this has caused the rental market to experience something of a mini-boom, with sudden surges in occupancy and its own high demand levels. It's an odd trend, but when the high demand for real estate goes unsatisfied, the demand for rentals seems to climb, even if renters would much rather be owners.
According to data from the latest American Community Survey, released by the U.S. Census Bureau in 2012, the average rent in the United States was $804 per month. We can safely assume that this figure has likely shot up since then - after all, the market has changed drastically, even in such a short period of time. Although not an official finding, the consumer website MyApartmentMap.com reports that the estimated average monthly rent in the United States is closer to $1,161 for a two-bedroom apartment. The website also provided info on average rents by state with Idaho, Arkansas, Kentucky, Oklahoma, Alabama and Ohio having the cheapest average rents.
By contrast, the American Community Survey found that West Virginia, North Dakota, South Dakota, Kentucky and Iowa had the cheapest median rents.
Until more housing opens up - whether through resale inventory being released or through new construction - the market's going to be in an interesting state. With more Americans eager to buy, more banks easing their lending requirements and very little homes for sale, we seem to have a formula for a combination seller's/landlord's market.