Moderate appreciation for the real estate market in 2015 was predicted by most professionals and economists. In many markets, we’re a bit ahead. I see overall home prices being up about 8 percent vs. the predicted 5 percent. This is due to builders still jogging and not sprinting, and existing home inventories still lagging.
Too many folks are fighting over too few properties. The two largest generations – the Baby Boomers and the Millennials – are competing for the same homes. Historically, the 50+ Boomer generation wanted to downsize and move to a community where others the same age were settling in. Today’s Baby Boomers want convenience and they want to live in a community with diverse age groups.
With unemployment around 5.5 percent and the stock market averaging 17,500-18,300, the confidence buyers need to make the next move is there. Finding what you want is the tough side of the transaction today. Buyers and sellers do not want to do the “fix-up” work, which means that homes that are not decluttered and lacking current amenities will be passed up.
During the past 12 months nationally, we put 5.3 million sales of existing homes on the books, a rather modest performance compared to 7.2 million in 2005. For new construction, it was 600,000 in the past year versus 1.3 million in 2005. No proof of the market going crazy here. If you look at housing starts to understand the trends, the comparison is just as graphic: 1.1 million starts for this recent period versus 2.1 million a decade ago (at a time when the US population was actually 10 percent smaller).
Today’s economy is good but still sluggish. Inflation is not yet a factor. A strong dollar and low energy costs are cooling. The Feds will feel the pinch to raise interest rates a bit this fall.
The housing market today can best be described as healthy and steady. If a move is in the cards, I would suggest you play sooner than later. Waiting in this type of environment is rarely a good move. The cost of NOT buying is more costly now than ever.
President and Chief Operating Officer, Allen Tate Company