Okay so I wanted to post this a month and a half ago but part of me wanted to see how Spring was going to I could talk about this in retrospect.  You know what they say, hindsight is 20/20, well in this case it's true but it's something anyone in the industry is well aware of.  Lack of inventory! Not just Brevard County.  Not just Florida.  The problem is country-wide,  pun intended (Get it? now bankrupt countrywide home loans?).  In 2012 our local MLS website had an average of 2500 residential properties for sale in the entire county, that's not a lot.  That's about 50% of what was offered the previous year.  Today we are hovering just over 2700 units which is a welcome increase but we need to see more homes coming to market.

The beginning of 2013 brought the paradigm shift to a seller's market which is great, prices are on the rise but not so fast as to deter buyer's.  It was projected that the Spring selling season would see faster increases in price than inventory.  While this is true to a certain extent, it seems to be keeping pace somewhat.  The results of the price increase has created a fair amount of market demand.  This is most readily visible in the offer stage of a real estate transaction.  Multiple offer situations are present nearly every time I contract a property for clients.  It has proved difficult to explain to buyers why they need to pay more than asking price if they really love their potential new home.  I have to advise clients plainly and simply, "If you really love this home, you're going to have to come in strong."  It is what is is I suppose but it is creating a challenging and aggressive real estate market for sure. 

Amidst all of the hypothesis and worries out there that another housing bubble is forming, I think we are safer than these predictions may indicate.  The simple fact that the structure of mortgage pre-qualifications has changed so dramatically is helping to keep the problem under control.  On the other side of the coin, it is making it difficult for otherwise well qualified buyers to purchase the home the desire.  This is most notable with regard to the properties Quality and Condition.  For example, a home that has bare concrete floors without any floor treatments would most likely not pass through underwriting standards with most lenders.  This really is a shame because some of these properties are in great condition with the exception of missing floor treatments. 

I suppose at the very least, the steady increases in price and value will help sellers feel more comfortable bringing their properties to market.  This has already become somewhat obvious with slight increases in inventory but the bottom line is- we need to see more inventory. 

Existing-home sales rise in January

According to the National Association of Realtors^®, prices are steadily rising above the levels of the last two years.  Total sales also rose in every region except the West which has been impacted the most by lowered inventory.  Limited inventory has plagued the market across the board for some time now, especially in Brevard County.  Buyer traffic has picked up significantly while seller traffic holds steady.  Lawrence Yun, the NAR's chief economist stated that buyer traffic actually rose 40% since a year ago.  This increase has resulted in higher demand for inventory that is low.  The paradigm shift to a seller's market has begun.  When buyer's hear "seller's market" it is understandable that they are wary to begin there search but this is actually a good thing.  It not only means that seller's may be more inspired to list their homes for sale easing the deficient inventory but it also means that prices and property values are on the increase.  That is a good thing!  The market is anticipating a seasonal rise in inventory this spring but given the buyer traffic, it is projected to be insufficient thus creating more multiple offer situations which tend to drive purchase prices up.

*This historic A.J. Sherwood House photo was provided courtesy of:
Creative Commons Attribution 2.0 Generic

Distressed homes sales-short sales and foreclosures- were actually on the decline slightly since the end of last year.  These types of transactions usually carry a discount off market value of on average around 20% for foreclosures and 12% for short sales.  While getting a "steal" isn't necessarily a bad thing, I for one am glad to see a decline in these properties.   A lot of times in foreclosures, the previous owner lets the home go into a state of disrepair and in some cases, intentionally destroys elements of the property as some sort of revenge against the bank.  This makes it very difficult for buyers who are financing their purchase to be in the game.  No lender is going to write a loan for a property in that's condition is that poor.  Not only that, and the same goes for short sales, the sellers are generally not going to make the necessary repairs to the property to get the transaction closed.  Who wants to wait three months or in some cases over a year for a short sale to close anyway?

Residential properties on average are selling four weeks sooner than last year and spending a lot less time on the market says NAR president Gary Thomas, broker/owner of Evergreen Realty in Villa Park,CA. In January,  31% of homes spent less than 30 days on the market!  First time home buyers accounted for 30% of all homes purchase in the same month.  These statistics should make buyers and sellers feel good what they're doing and the condition of the market.  I guess the only thing that concerns me to a degree is the limited inventory and whether or not it will create somewhat unrealistic price increases.  That could be especially concerning with some of the strict underwriting standards lenders have adopted since the 2008 collapse.  I guess time will only tell but I tend to think that these statistics will inspire more sellers to bring their houses to market.