Sellers are always hoping that home values will go up and, of course, buyers are looking for the opposite. Where exactly are the numbers and where will they go in the future. Unfortunately, no one has a crystal ball to accurately predict that future. Our best indicators are the trends established in each individual neighborhood.
The number of distressed properties tends to drive prices downward, everyone knows that. But, numbers in the last few months show some positive signs for sellers. According to Garner Economics, non-distressed home values are up from January 2011 by 5 percent. Distressed values have fallen 5 percent.
The big advantage is the lack of inventory. Numbers compiled by Windermere of the available inventory on the MLS indicate a strong seller’s market. The entire Eastside, except parts of Redmond which show a slightly higher supply, reports statistics that show a less than three month supply of inventory. The Seattle area is not far behind. This means that if there are no new listings, based on the present rate of sales, everything would sell in less than 3 months. Last year at this time the same areas had a four- to six-month supply.
Finding the perfect home for a client has become increasingly difficult for the Realtor®. The limited supply has resulted in multiple offers in many areas at all price ranges. Homes and condos in good condition and priced at market value are selling quickly.
Does this mean that values will increase? Not necessarily! It does, however, bring hope that home values will not continue to fall.
In December of 2011, Zillow surveyed 109 economists and real estate experts on their expectations for future real estate values. The results showed a negative .18 percent in 2012 but culminated in a gradual rise to a 10.83 percent increase in 2016. Owning a home is still a good way to build wealth or to secure a retirement investment.
Mathew Gardner, Gardner Economics, expects a 1.6 percent positive growth increase in 2012. In his report, he states that “buyers would rather wait for a higher price than to admit to their friends that they bought too soon.”
According to the Case Shiller Pricing index, home values are at 2003 levels.
In 2003, a $440,000 mortgage at 5.62 percent interest would have a principal and interest payment of $2,590. With today’s interest rate of 3.62, that same mortgage would have a payment of $2,080, a savings of $510 per month.
With inventory down 25 percent and competition for the pool of buyers strong, selling a home now is a good option. Gardner agrees with Freddie Mac’s opinion that ultimately interest rates will have to increase as economic growth stimulates inflationary pressure. If you really want to move, waiting to buy that dream home may not be prudent. With interest rates low, you may still be saving money with a purchase today.