Median home values, improving sales and stronger inventories were all features of the 2012 first quarter report from the National Association of Realtors (NAR).
Median existing single-family home prices rose year-over-year in 74 out of the 146 metro areas tracked by NAR. By comparison, in 2011’s four quarter, only 29 areas were showing gains from a year earlier, which suggests that in 2012, more buyers have attained the necessary income levels to buy a home in their area.
Lawrence Yun, NAR’s chief economist, said buyer demand has been such that it has created some volatility in local markets.
“Home prices are more volatile than normal because of sudden upswings in buyer activity in some localities, and also are affected by the prevalence of distressed sales,” he said. “Home prices lag sales activity because the transactions were negotiated mostly in the previous quarter. Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future.”
Housing inventory, Yun continued, is a big part of the recovery’s narrative.
“We now have broad shortages of lower priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges,” he said. “This is good news for many sellers who wish to list now, or for those waiting for prices to improve.”
At the end of the first quarter, there were 2.37 million existing homes available for sale, which is 21.8 percent less than the first quarter of 2011, when there were 3.03 million homes on the market. Since the summer of 2007, when inventories hit an all-time high at 4.04 million, they have steadily declined, a development rife with interpretations.
Ian Robinson, the branch manager for Coldwell Banker Northbrook, said that inventories are among the positive developments he’s observed in the local Chicagoland markets.
“[T]he great news locally is that inventories are down substantially, the number of sales is up and in some neighborhoods and price ranges we are seeing more demand than there are homes available,” Robinson said via email. “When homes are well priced or reduced to a market level price in these pockets of demand they are generating multiple offers and selling very close to or above asking. With two, three, four, or more offers coming in, buyers can no longer afford to approach every negotiation as if they won’t be in a competition or they will lose the house.”
The nation’s median home price for single-family properties was $158,100 in 2012’s first quarter, a 0.4 percent decline from the first quarter of 2011. Home sales, though, are up by every measure, having increased 4.7 percent from 2011’s fourth quarter and 5.3 percent from the first quarter of the same year.
“This is the highest first quarter sales pace since 2007,” Yun said. “With strong market fundamentals, total home sales this year should rise 7 to 10 percent.”
Moe Veissi, NAR’s president, said a new batch of opportunity in the housing market has inspired much of the year’s sales activity..
“Historically favorable housing affordability conditions are making it easier for buyers to enter the market despite the unnecessarily tight credit conditions,” Veissi said. “Housing supply and demand are roughly balanced with overall housing supply at the lowest level in six years, putting sellers on an even footing with buyers in most markets.”
Other details in NAR’s report included: first-time buyers purchased 33 percent of homes in the first quarter, unchanged from the fourth quarter (they were 32 percent in the first quarter of 2011); distressed homes accounted for 32 percent of the quarter’s sales, down 38 percent from a year ago; the share of all-cash home purchases in the first quarter was 32 percent, up from 29 percent in the fourth quarter but down from 33 percent in the first quarter of 2011; and investors, drawn by bargain prices and who make up the bulk of cash purchasers, accounted for 22 percent of all transactions in the first quarter, up from 19 percent in the fourth quarter and down from 21 percent a year ago.
With all the various factors in play, Robinson said that while not perfect, the market is showing definite signs of improvement.
“We are not there quite yet but the light at the end of the tunnel is getting larger for our local market,” he said. “With rates so low, price decline slowing, rents rising and in many areas still a good inventory of homes to choose, from now is a great time for buyers to buy a first home, investment property or move up.”