Regarding Inventory and increasing home prices, RISMedia reported today: http://rismedia.com/cs/24822/1056351/28267056/93246?utm_source=newsletter&utm_medium=email
|“Home Prices Charge Upward, Stoked by Strong Sales Pace|
|RISMEDIA, Tuesday, May 16, 2017— Home prices continue to escalate, charging upward 6.9 percent in the first quarter of 2017, according to the latest quarterly report by the National Association of REALTORS® (NAR). The increase, stoked by the strongest quarterly sales pace in a decade, marks three straight quarters of growth.
“Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter,” says Lawrence Yun, chief economist at NAR. “Those able to successfully buy most likely had to outbid others—especially for those in the starter home market—which, in turn, quickened price growth to the fastest quarterly pace in almost two years.””
There are consumer concerns about housing affordability and a quickening of sales prices reminiscent of the market prior to the crash in ’08. The biggest difference to note in the most desirable areas of RVA is that in multiple bid situations, cash and no appraisals are winning the day. Even if you are a qualified purchaser, and are willing to go well over sales price, it will be tough to compete in order to get the home you seek. At least in certain areas of town.
Should we be concerned that this situation will lead to another crash? Probably not; our current situation has two things working in our favor. There is a sever lack of inventory, and those buyers who may be overpaying for these homes are paying cash. There is no financial exposure for the lending institutions.
“Yun says, “High demand is poised to continue heading into the summer as long as job gains continue; however, many metro areas need to see a significant rise in new and existing inventory to meet this demand and cool down price growth.””
It is going to take a little time before home inventory catches up with demand. While this condition will likely continue to inflate sales prices, making competition stiff, it may quite possibly retard the market in the mid-range move up buyers. They may be less likely to sell because they don’t know where they will be going. These buyers may have to adjust their expectations if they are forced to move due to job relocation. They may be forced to do a two stage move, with a rental in the interim.
This is an unusual market, but not unanticipated. It’s going to be exciting to watch it unfold in the coming months.