Change occurring In Real Estate Markets
What a mixed bag of information relating to the housing market. Home builders slow the pace of building to 6 year lows, and interest rates are at 2 year highs. In spite of this, a record number of homes will probably be sold again in 2005.
Reporting from a medium size market in the Midwest, Springfield IL., we just might represent a microcosm of what is occurring nationally. Our market has the good news of a record 8th straight year in the number of homes sold, and our sales pending under contract are running 21% ahead of last year at this time. All sounds good for home sellers so far, right?
What the national home builders are reporting is true here as well, homes are sitting on the market longer before selling. Why? Can't say for the nation, however our market has the largest number of homes listed for sale in history. Forget interest rates as the major impact player, and look to supply versus demand.
Our local economy is on solid footing with unemployment below 5%, average income above state averages, and one of the most affordable housing markets in America. Why are so many people selling? Tough question to answer. Many are from excess builder inventory, many are sellers that have built custom homes and need to sell their current home, many have purchased another home before selling their current home. Regardless of where all these home sellers have come from, there are enough homes on the market to meet demand without listing another home for sale until April.
What happens when supply exceeds demand? What happens when interest rates rise? Both combine to stabilize prices. We've heard the stories of 55% appreciation in some markets, but not here. During the boom years of the 1990's the Springfield market appreciated a total of 9.9%, for the entire decade! Things have changed with the cost of new construction going up, and we are now realizing some whopping 4 to 6% annual appreciation gains!
What we are experiencing here in the Midwest will probably be felt nationwide. First prices flatten, and then fall. Of course it depends upon where you live, the higher your appreciation rates have been the steeper the fall, the more moderate your appreciation rates are, the more moderate the fall in prices.
If you are considering selling in one of the bubble markets to maximize your gain, you had better hurry before rates and inventories increase. After you sell, come on out to Springfield, IL. where prices are affordable, the people are nice, the schools are good, and where we have plenty of homes for you to choose from.
Reporting from a medium size market in the Midwest, Springfield IL., we just might represent a microcosm of what is occurring nationally. Our market has the good news of a record 8th straight year in the number of homes sold, and our sales pending under contract are running 21% ahead of last year at this time. All sounds good for home sellers so far, right?
What the national home builders are reporting is true here as well, homes are sitting on the market longer before selling. Why? Can't say for the nation, however our market has the largest number of homes listed for sale in history. Forget interest rates as the major impact player, and look to supply versus demand.
Our local economy is on solid footing with unemployment below 5%, average income above state averages, and one of the most affordable housing markets in America. Why are so many people selling? Tough question to answer. Many are from excess builder inventory, many are sellers that have built custom homes and need to sell their current home, many have purchased another home before selling their current home. Regardless of where all these home sellers have come from, there are enough homes on the market to meet demand without listing another home for sale until April.
What happens when supply exceeds demand? What happens when interest rates rise? Both combine to stabilize prices. We've heard the stories of 55% appreciation in some markets, but not here. During the boom years of the 1990's the Springfield market appreciated a total of 9.9%, for the entire decade! Things have changed with the cost of new construction going up, and we are now realizing some whopping 4 to 6% annual appreciation gains!
What we are experiencing here in the Midwest will probably be felt nationwide. First prices flatten, and then fall. Of course it depends upon where you live, the higher your appreciation rates have been the steeper the fall, the more moderate your appreciation rates are, the more moderate the fall in prices.
If you are considering selling in one of the bubble markets to maximize your gain, you had better hurry before rates and inventories increase. After you sell, come on out to Springfield, IL. where prices are affordable, the people are nice, the schools are good, and where we have plenty of homes for you to choose from.
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