Right now, the residential real estate market is not lacking in sales activity. It is caused by fabulous interest rates, rock-bottom prices and an increase in demand. Thus far, the first two months of 2012 are 50-60 percent greater as compared to this time last year. All indicators for the Carolinas look at a healthy uptick in sales units this year. January and February are proving to be just that!
That being said, contract failures are proving to be a big deterrent in today’s market. After negotiating a contract in good faith, some sellers feel abused when they receive bad news from the inspector which, in turn, results in a low appraisal. A situation like that is incredibly frustrating and for many, it is the final straw.
A lack in buyer confidence, expectations on dates that have to be met and more stringent lending requirements are all potential roadblocks that we are faced with today. They are not however, the end of the world. Nevertheless, left uncontrolled, they contribute to the highest fall-through rates we have seen in a long, long time.
Do you dream of owning your own home someday? The pundits want us to believe that your generation – born between 1980 and 1995 – are disenchanted with the dream of homeownership. But I, for one, don’t believe it for a moment, although for the first time in history, you’re not leading the charge in the housing recovery.
Here’s what I have heard and think:
It is the time of year when everyone feels compelled to either summarize the year that has past, make a top 10 list or even some combination of the two. We are no different. When we decided to write this blog, we asked our Realtors what information they would include on our list. Here are the answers:
Earlier this month, there was more news that, for the fourth straight month, existing home sales were up nationally from the previous year’s levels. What is the reason? A lot of this uptick is due to the tax credit of the Spring of 2010 where sales were borrowed from the second half of 2010. This made this Falls’ results more realistic.
The latest report from the National Association of Realtors shows sales of existing homes up 13.5 percent to a seasonally adjusted annual rate of 4.97 million houses in October. I am also hearing from around the country that the upper end is starting to move, especially in the second- home markets. As I stated many times, real estate is a local game. This is good news if it is systemic growth.
Last October was the bottom. With four straight months of 2011 growth, this doesn’t mean that we are on another boom course, but rather a gentle recovery over time.
Listing inventories are down year over year in the Carolinas. I credit this to two situations. The first is when the seller has made the conscious decision to pull their property off the market and wait. The second is that current Fair Market Value does not allow them enough equity to make their next move.
I sense that at least 40 percent of home sellers are still unrealistic about home value appreciation despite the recent economic downturn and volatility in the nation’s housing markets.
On a national level, home values declined for five consecutive years during the downturn. Since 1950, home values historically have tended to appreciate at an average of 2 percent to 5 percent per year. So we, as Americans, have been ingrained to believe that the value of our home will always rise. What is it that creates such an unrealistic view on home values – even now as much of the economy is still working hard to find its path?
Last month I attended the meeting of the Leading Real Estate Companies of the World Board of Directors in Chicago. The board members represent premier residential real estate companies and, as I was heading back to my home sweet home in the Carolinas, I felt a sense that the second half of the year had the promise to be very positive. Even our Florida and Midwest brokers are reporting an increase in business without the tax incentive that we had last year.
Overcompensation in mortgage reform is still causing more-fall throughs than we would like. However, as the pendulum is trying to get back to a place that is a win-win for the customer, as well as the investor, we are seeing some movement.