Is There a Window of Opportunity for Sellers Right Now?

by The KCM Crew on February 25, 2013 ·

One of the most interesting revelations of the latest National Association of Realtors (NAR) Existing Home Sales Report is the shortage of housing inventory being reported throughout much of the country. At the same time, buyer demand is dramatically up over last year.  Here are some key points:

• Total housing inventory at the end of January fell 4.9 percent to 1.74 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace.
• This represents the lowest housing supply since April 2005 when it was also 4.2 months.
• Listed inventory is 25.3 percent below a year ago when there was a 6.2-month supply.
• Raw unsold inventory is at the lowest level since December 1999 when there were 1.71 million homes on the market.

What Does This Mean if You Are Selling a Home?

The price of anything is determined by supply and demand. According to NAR’s report, inventory is at its lowest level since the real estate boom eight years ago. At the same time, demand is up. Lawrence Yun, NAR chief economist, reveals:

“Buyer traffic is continuing to pick up, while seller traffic is holding steady. In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We’ve transitioned into a seller’s market in much of the country.”

Does that mean you should sell your house now? Or should you wait to see if prices increase? Nobody knows for sure. However, some feel that there may be a pent-up inventory about to come to the market because, as prices increase, it will free up some sellers who have been locked in a negative equity situation (where the house is worth less than the remaining mortgage).
The Zillow Negative Equity Forecast predicts:

“The negative equity rate among all homeowners with a mortgage will fall to at least 25.5 percent by the fourth quarter of 2013, freeing more than 999,000 additional homeowners nationwide.”

If these homes come to market, the supply/demand ratio will begin to balance out and lessen the opportunity a seller now has.
Calculated Risk, a well respected blog which analyzes the economy:

“With the low level of inventory, both in absolute numbers and as a month-of-supply, and the recent price increases in some areas, it would seem likely more inventory would come on the market.”

Lawrence Yun agrees:

“We expect a seasonal rise of inventory this spring.”

Yet, Yun is quick to add:

“It may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth.”

Probably the most interesting comment on this comes from Calculated Risk:

“I need to think about this…This will be an interesting issue all year.”

This is an issue that is important to every seller. Make sure that you are working with a true professional that is dedicated to keeping current on what matters in the real estate market so he/she may provide you with the best advice possible as this situation becomes clearer.

Housing: It’s Becoming a Seller’s Market

By Nick Timiraos

National Association of Realtors

The National Association of Realtors said on Thursday what home buyers in many parts of the United States have known for months: it’s becoming a seller’s market.
The number of homes listed for sale in January fell by 4.9%, leaving 1.74 million properties on the market. That’s the lowest since December of 1999, when there were 1.71 million homes on the market. By contrast, there were 2.91 million homes on the market two years ago at this time.
After adjusting for seasonal factors, home sales rose by just 0.4% in January, to an annual rate of 4.92 million units. Still, that’s up from 9.1% one year ago.
The upshot is that there’s a growing pool of buyers chasing a shrinking supply of homes. If the trend holds, prices will keep going up. At the current pace of sales, it would take just 4.2 months to sell the current supply of homes available for sale, down from a 6.2 months’ supply one year ago.
While inventories typically increase in the spring, the Realtors’ group has expressed growing concerns that sales volumes are being held back by the lack of choice. This is good news for homeowners who have watched home prices drop over the last six years, but it’s bad news for buyers—and for anyone that makes their living selling real estate.
Inventory declines have been the most dramatic in California, Arizona, and other markets that witnessed some of the largest home price declines. Those cities have large numbers of underwater borrowers—people who owe more than their homes are worth—while many others may have equity but aren’t willing to sell because prices have fallen so far.
Investors have also been aggressive in buying up properties that are selling for less than their replacement cost.

National Association of Realtors

Home sales could rise to 5.2 million units this year, an increase of nearly 12% from last year, according to economists at Goldman Sachs GS +2.08%. They base their forecast on household formation and demographics, which both suggest rising demand for housing in the coming years, and affordability measures such as mortgage rates and home prices.
But the economists note that there’s a considerable amount of uncertainty that could make those targets hard to hit, particularly if there’s nothing for would-be buyers to purchase.
Follow Nick @NickTimiraos

5 Things To Love About Asheville, North Carolina

5 Things To Love About Asheville, North Carolina
Posted: 02/20/2013 7:20 am
From the stunning views of the Blue Ridge Mountains to a vibrant art culture, Asheville, North Carolina has everything you need for a romantic getaway in the South. Here are five things to fall in love with in Asheville, recommended by local bed and breakfast innkeepers.

History
No trip to Asheville is complete without a tour through the Biltmore Estate, a 19th-century chateau-style mansion that once belonged to the Vanderbilt family. While in Asheville, you can also visit the former home of Carl Sandburg, a Pulitzer Prize-winning author. Innkeepers of Asheville B&Bs also suggest walking or jogging through the historic Riverside Cemetery.
The Outdoors
For the adventurous, the Asheville area is replete with things to do and see. Take a ride down Sliding Rock, a 60-foot smooth rock that serves as a waterslide and dumps you into a natural swimming hole. Head to Graveyard Fields to go hiking and see waterfalls, or explore the Pisgah National Forest and its hundreds of hiking trails. Back in town, head up to the three-level balcony tavern on Battery Park Avenue known as Sky Bar, and sip a drink while soaking in the panoramic view of the sunset over the Blue Ridge Mountains. Get there early, as the popular bar gets crowded at sunset, and keep in mind, it's not open in the winter.
Art
Asheville innkeepers overwhelmingly agree that the local art galleries and markets can't be missed. The Folk Art Center, Woolworth Walk, and Grove Arcade feature the work of hundreds of artists, from paintings to pottery to jewelry. There are also plentiful individual galleries that are recommended, such as New Morning Gallery, Blue Spiral 1 and Grovewood Gallery. You can also visit the Penland School of Crafts to observe art being made.

Beer and Wine
Beer fanatics can't miss a stop in Bruisin Ales, which sells over 1,000 beers from across the world. If you prefer wine, check out Appalachian Vintner, a wine shop that also carries craft beer. Grab a bottle to go or stay for tastings or a drink on the private patio. You can also hang out at the Battery Park Book Exchange & Champagne Bar, a quirky shop that combines a bookstore with a wine bar.
Fantastic Food
Asheville has a growing culinary scene, with up-and-coming celebrity chefs and local sourcing to satisfy any foodie. Some of the most highly-recommend restaurants from innkeepers to their guests include:

• Cúrate: This award-winning restaurant serves traditional Spanish tapas. It is run by Executive Chef Katie Button, who was a semi-finalist for the "Rising Star Chef" 2012 from the James Beard Foundation.
• Plant: Enjoy tasty vegan food at this restaurant run by a chef who truly cares about the politics and ethics of food.
• Bouchon French Bistro: Dine here if you're in the mood for French comfort food and wine. No pretentiousness--just delicious, authentic French bistro cuisine.
• Corner Kitchen: When President Obama eats here, you know it's good. Eat contemporary American cuisine in this historic home.
• Cucina24: Taste small-batch, handcrafted Italian cuisine made from fresh, local ingredients.

Be sure to read BedandBreakfast.com's complete guide to Asheville for tips on Asheville day trips and nightlife!
--Emily Starbuck Crone

How High Will Mortgage Rates Go?

By Karen Weise on February 01, 2013

My heart beat a little faster when I read the news that the average interest rate for a 30-year mortgage reached a four-month high yesterday, at 3.53 percent for a loan. As a renter, I couldn’t help but wonder if I’m missing out on this once-in-a-lifetime chance to borrow for next to nothing.
Rates are now up almost a quarter-point from the mid-November record low of 3.31 percent, but looking into the numbers, it’s clear that I shouldn’t be worried. Mortgage rates will be going up over the next two years—but not too fast, according to the most recent forecast by the Mortgage Bankers Association. The MBA expects rates to hit 4 percent in the second quarter and 4.4 percent by the end of the year. By the end of 2014, the trade group predicts rates will scooch up a bit more, to 4.6 percent. Having rates rise more than a full percentage point does start adding up to real money in a household budget. An extra percentage point on a 30-year, $300,000 loan adds about $3,000 a year in payments.

“If the economy went into the tank, mortgage rates would go lower,” says Greg McBride, senior financial analyst at Bankrate.com. “That’s winning the battle but losing the war.” He says high unemployment, the slow pace of the economic rebound, and active Federal Reserve policy will continue to keep rates low.

 

But to keep this all in perspective, let’s remember that we’re still near record-low levels. Even if rates do hit 4.6 percent by the end of 2014, that’s still lower than what they were before the housing bubble. In the past 25 years, the average 30-year loan has been closer to 7 percent. Since 1972, the average rate has been 8.64 percent, pulled up by the early 1980s, when rates peaked at a brutal 18.36 percent. That’s higher than credit-card rates these days, which are unsecured loans. In 2012, buying was more affordable than ever, according to data compiled by the National Association of Realtors, which predicts 2013 will be the third best year on record. As McBride says, “everything is relative.”

Weise is a reporter for Bloomberg Businessweek in New York.