Last year, housing prices increased more than they had in seven years, and buyers’ markets turned into sellers’ markets overnight. In many cities and towns across the country, this price jump was a result of inventory shortages that forced buyers to compete over the few homes that were available for sale.
Will the housing recovery continue at a rip-roaring pace this spring, or will it slow down to let real estate consumers catch up?
Real estate facts for spring 2014
Whether you’re buying a home or selling a home this year, you should be planning for the opening of the spring homebuying season. Spring is the time of the year when most new homes come onto the market and when most buyers are looking—especially families with school-age children who want to be settled in their new homes in time for school in the fall.
The spring season sets the pattern for the year in terms of sales and price. So even if snow is still on the ground where you live, it’s time to get an idea of what to expect when your housing market emerges from hibernation.
Prices will rise—slowly. After explosive gains in many markets, home prices retreated in the fall of 2013 and the recovery’s momentum slowed. While home prices are expected to continue to rise this year, the stage has been set for them to do so at a much slower pace than last year. Experts predict that prices will rise between 3 percent and 4 percent nationally—more in the hot markets of California and less in markets such as Ohio, New England, and the Southeast.
An upswing in prices is good news for sellers hoping to get good money for their homes. Yet prices remain below their historic highs, despite the rising prices, which is fortunate for buyers.
Inventory may be limited. On January 1, inventories on Realtor.com’s database of nearly 2 million listings had fallen to virtually the same levels as last year, erasing the year-over-year inventory growth. This raises questions about the possibility of a return to the market dynamics of last year, which saw inventory shortfalls drive prices upward.
Monitor inventories in your market to see if they grow as significantly as they should in February and March. If not, you might see a repeat of last year’s shortage-driven price bubbles.
Market times will be shorter. If you’re a buyer, be ready to move fast this spring. The average market time among the 52 markets surveyed by RE/MAX in November was only 68 days. These short market times indicate that other buyers are ready to move fast, and you should be too.
Of course, market time will vary by the price of the home. Lower priced entry-level homes will sell faster than luxury homes priced at $1 million or more. According to the Institute for Luxury Home Marketing, more expensive homes are selling in a median of 181 days.
There are more question marks than usual this spring season because of the dramatic price surge of 2013 and the unanticipated shortages of homes last year. Even so, the 2014 season should be much better for buyers and sellers, with prices on the rise (but still below historic peaks in most markets) and mortgages easier to get for borrowers with good jobs and good credit.
Steve Cook is managing editor of Real Estate Economy Watch, which was recognized as one of the two best real estate news sires of 2011 by the National Association of Real Estate Editors. Before he co-founded REEW in 2007, he was vice president of public affairs for the National Association of Realtors. In 2006 and 2007, he was named one of the 100 most influential people in real estate. During his 30 years in public affairs, Cook has been a broadcast news correspondent, served two Members of Congress as press secretary and was a senior executive in the world’s largest independent public relations firm in Washington and Chicago.