It’s a Seller’s Market–Not a Name-Your-Price Market

By Ryan Dosen

 

Speaking at the Residential Economic Issues & Trends Forum at the Realtors Legislative Meetings & Trade Expo earlier this month, National Association of Realtors, or NAR, Chief Economist Lawrence Yun laid out a generally positive forecast for the economy and real estate market. Based upon Yun’s projections and other important economic data and market indicators, we expect to see a strong housing market that continues to outpace last year’s market, leading to an even stronger 2016.

Small Slip in April

NAR reported on Thursday that “despite properties typically selling faster than at any time since July 2013, existing-home sales slowed in April but remained above an annual sales pace of five million for the second straight month.” Yun’s takeaway from the 3.3 percent decline in total existing-home sales was that the setback was “the result of a lagging supply relative to demand and the upward pressure it’s putting on prices.”

Empowered Sellers and Stubborn Buyers

Indeed, we are still seeing frustratingly low inventory numbers in many of our local areas. We are also seeing many situations where sellers, apparently feeling empowered by the low inventories, are pricing their homes too aggressively. Many areas certainly are seeing seller’s market conditions. However, nowhere are we seeing “name your price” seller’s market conditions.

There are lots of buyers out there and many aren’t even in deal-only mode. They are willing to pay market price for a home. That said, few buyers in today’s market are willing to overpay for a house.

NAR reports that inventories were up 10.0 percent at the end of April, but there are still fewer homes on the market than there were at the same time last year. We expect inventories to continue to rise and that this will help loosen the stalemate between empowered sellers and stubborn buyers.

Yun’s Housing Forecast

At his recent presentation, Yun revealed many reasons for optimism about the housing market, including the fact that monthly pending home sales are up 11 percent from where they were just one year ago. Yun expects housing starts to climb around 10 percent in 2015 to 1.1 million units. He expects new home sales to rise from 437,000 to 570,000 this year. He also forecasts that existing home sales will climb this year from 4.9 million to 5.3 million. Further, Yun sees median home price growth in the 6 percent range this year and in the 4 percent range next year. Yun also believes that consumer confidence will have climbed from 87 in 2014 to over 100 in 2016.

Yun paints a fairly rosy picture. With inventories still down and many buyers getting frustrated, it remains a good time to consider listing, especially if you’re going to be upgrading. If Yun is right and home prices will continue to climb, you’re likely better off riding the gains in the more expensive home.

Memorial Day

We are given an extra day this weekend so that we can honor the fallen heroes that died while fighting for our freedom. I was fortunate enough to have a father that made it back from Vietnam. Not all were so lucky.

I and many of my crazed CrossFit brethren will be doing the workout “Murph” this weekend to honor the fallen Navy SEAL LT. Michael P. Murphy and the many other heroes that have given their lives while serving in the armed forces. In between the barbecues and parades and family gatherings, let’s all take a little time to remember and reflect upon the important people that made the ultimate sacrifice so that such things could even be possible.

 

This article was published by 21st Century Media and the Daily Local News (West Chester, PA). To read this article on the the newspaper’s site, please visit the Daily Local News.

 

 

To view all of Ryan Dosen’s 21st Century Media real estate columns, visit http://www.dailylocal.com/search?text=dosen.