Optimistic Outlook for Housing Market
January 9, 2018 | Elite Realty
The United States housing market has been dealing with the issue of limited inventory for quite some time and now faces other challenges with regard to recently enacted tax reform, but despite these challenges there are several notable positive trends in the housing market. Factors in the housing market that are cause for optimism include an increased number of existing-home sales for October, the number of new-home sales in October, decreased number of days on the market for homes listed, an increased number of homeowners with equity, and mortgage rates remain relatively low.
Though inventory of for sale homes across the nation remains low, sales have continued to show increases. The number of total existing-home sales – which includes single-family homes, townhomes, condos, and co-ops – increased by 2 percent in the month of October to a seasonally adjusted annual rate of 5.48 million, according to the National Association of REALTORS® (NAR). Sales are currently at their strongest level since June of this year.
The number of single-family closed sales (month/month) for the Southwest Florida region was 301 for October 2017 in comparison to 295 in October 2016, representing a 2 percent increase. The number of pending sales (month/month) for Southwest Florida in October 2017 was 623, in comparison to 702 pending sales for October 2016, representing an 11 percent decrease. The area also reported 561 total closed sales (month/month) for October 2017 in comparison to 556 total closed sales for October 2016, representing a 1 percent increase.
New-home sales also came close to reaching a post-recession high in October, which signifies that some much-needed relief to inventory shortages may be in store for the housing industry. New home construction – which reflect a combination of totals from the single-family home and multifamily home sectors – increased by 13.7 percent in October to a seasonally adjusted annual rate of 1.29 million, the Commerce Department reported.
According to a recent NAR report, homes stayed on the market for an average of 34 days in October, compared to October 2016 when homes for sale were on the market for an average of 41 days.
Another positive residential real estate market trend is represented by a growing number of homeowners with an increased amount of equity in their homes. As more homeowners see the equity in their homes increasing, they may be encouraged to cash in. The share of equity-rich properties increased to a new high in the third quarter of this year, according to ATTOM Data Solutions’ Q3 2017 U.S. Equity & Underwater Report. Twenty-six percent of homeowners with a mortgage – or more than 14 million – are now considered equity rich.
Mortgage loan rates are also still comparatively low. Potential homebuyers continue to lock in mortgage rates that are low by historical standards. The 30-year fixed-rate mortgage averaged 3.90 percent in October, according to Freddie Mac.
Though most of the aforementioned data reflects the nationwide housing market averages, it is important to note that some areas are experiencing further positive movement of their own. For example, the Bonita Springs Area Market Report for October shows the following:
- New listings increased 1.4 percent from 299 in October of this year in comparison to 295 during October of 2016
- Average list prices increased from $484,000 in October 2016 to $535,000 in October of this year, representing a 9.4 percent increase
- Months of inventory increased from 6.4 in October of 2016 to 9.9 percent in October of this year, representing a 54.6 percent increase