Everyone wants to know if the housing market is truly showing signs of recovery since there are conflicting headlines everyday.
Some say sales are up while reports show prices are down. Is the real estate market on its way back? In some ways, yes and in other ways, no.
The market seems to have woken up from being dead, so any positive activity is exciting and will be talked about. I have seen an increase in the number of homes receiving offers and getting in contract and closing. Also, open houses are faring better in the number of people attending. The numbers went from zero to two to about three to five.
There is still the lingering problem of supply and demand. There are loads of supply and not enough demand. The inventory of distressed properties has also caused a confusion with buyers thinking that they can get a steal – and some of them can.
As inventory continues to enter the market it will impact prices in two ways: Discounted competition for the buyers and appraisal values.
Foreclosures and short sales are no longer allowed to be the blueprint for a home value that is a straight seller to consumer purchase. That is good news for the seller. However, the fact that buyers are aware of the foreclosures and short sales and the ability to actually be able to buy a home in that category at a very deflated price is keeping the buyers wary of feeling like they are going to overpay or not get a bargain because it is a buyers market.
A Buyers Market?
To a buyer, a buyer's market is the opportunity to buy a home they otherwise may not be able to afford. It is truly a buyers market right now, but it is also a seller's market. Why? Because of the interest rates.
It's the interest rates that truly make it a buyers market in 2012. Just one or two percentages higher on an interest rate and they can no longer make a purchase.
After consulting with a mortgage professional, the easiest and best analogy is this: If an interest rate goes from 4 percent to 5 percent on a $400,000 loan, that rate increase would approximately equate to a $50,000 reduction on a loan to maintain the same monthly payment.
In other words, the loan would have to be $350,000 instead of $400,000 and that can seriously hurt the sellers' sale price. Sellers should also take advantage of the interest rate market because once they list their home, it is their market too.
All in all, spring has sprung and so has the housing market in 2012.
Ellen Kehrli-Steinberg is a realtor for Re/Max Hearthstone.