Current real estate market conditions report mirrors inventory of unsold homes; prices firm even though its taking more than 60 days to sell. The housing market has a balanced demand and supply for the first time since 1998.
For the first time in eight years, the overall U.S. real estate market is experiencing a rare balance between home buyer demand and home seller supply, according to the latest “Current Market Conditions” quarterly survey.
Only 45% of respondents reported more buyers than sellers, compared to a 61%-39% ratio six months ago. Thirty-one percent reported more sellers than buyers; the remaining 24% said their markets are almost evenly divided. In the South, the Midwest, the Northeast and in California, the buyer-seller ratio closely matches the national figures.
National survey results from real estate agents in 47 states mirrors the latest monthly sales activity reported by the National Association of Realtors (NAR), which estimated the nation’s supply of unsold homes for sale at 5.3 months for both January and February. An inventory of 5.5 to 6.0 months is considered a balanced market between buyers and sellers.
“The last time we experienced a balanced housing market was in January, 1998, when we had a 6.4 month supply of unsold homes,” said Walt Molony, a NAR spokesperson. “The record for the lowest inventory was in January of 2005, when we reported a 3.7 month supply.”
There are exceptions to the latest balanced housing market reports – most notably in many Western States and Alaska, where buyers still outnumber sellers by a substantial margin – but overall results indicate an orderly transition to more normal housing markets. This appears to be the beginning of the ‘soft landing’ many economists are predicting for homes for sales and certainly good news for both consumers and Realtors after five years of market imbalance.
The National survey in the first quarter of 2006 also found:
• It’s taking longer to sell a home in most markets, and the trend is up. Fifty-five percent of respondents said it is now taking more than 60 days, on average, from listing to sale. Three months ago, only 30% said it was taking more than 60 days.
• Seventy-five percent of sellers are still getting at least 95% of their asking prices. Only seven percent say they are still getting more than 100%.
• Home appreciation in the past 12 months is holding firm at about 10%. The trend is moving toward single-digit appreciation, however. Fifty-four percent reported five percent or less, 20% said five to 10%, and 26% said 10% or more.
• Eighty-one percent reported a good supply of unsold homes in virtually all price ranges, with inventories steadily growing.
• Multiple offers dropped from 70% a year ago to 39% in the first quarter of 2006 as demand for unsold homes decreased in many markets..
• Move-up and repeat buyers outnumber first-time buyers by a two-to-one margin in most parts of the country. The margin is three-to-one margin in California and the South. The national two-to-one ratio has remained constant in the past three to five years despite rapid run-ups in home appreciation.
Thomas M. Stevens, NAR president, noted: “Housing is simply returning to a normal market. We’re still seeing double digit annual price gains but we should get down to single digit appreciation fairly soon.” Nationally, sales of existing homes rose in February following a five-month decline. The national median home price for all housing types was $209,000 in February, up 10.6% from $189,000 a year ago.
Current Market Conditions responses closely reflect local economic news and population growth.
For example, Neil Kalinski of Diamond GMAC, exclusive agent for Tempe, AZ, said move-up buyers are driving his market. Median home price is $260,000, up 25-30% in the past year. He reports more buyers than sellers in this growing suburban Phoenix community and home campus for Arizona State University. Time on the market is 30 days or less, with sellers usually getting 100% or more of asking prices. “Overall, our market has slowed somewhat. Prices are starting to level off, which should be good for both buyers and sellers.”
Helena Talbot of Talbot and Company, exclusive agent for Leesburg, Sterling, Ashburn and Dulles, VA, reported more sellers than buyers and a median price of $400,000. Average time on the market from listing to contract is 90-120 days. Most sellers are getting at least 95% of asking prices. “Our greatest activity is coming from move-up buyers,” Talbot said. “Average price appreciation is up 10% to 15% in the past year.”
Saralou Durham of RE/MAX Preferred Group, exclusive agent for Montgomery, Anderson Township, Hyde Park and Mt. Adams in the Cincinnati metro area in Ohio, reported a 50-50 market between buyers and sellers. Average time on the market is 60-90 days. Sellers are getting at least 95% of asking prices, she said. Median home prices range from $181,750 to $397,500. “Exciting changes continue in Mt. Adams, meeting the needs of both young professionals and empty nesters.” She stressed the proximity to downtown business and shopping and the quality of schools.” Durham added: “Demand for new homes is so strong that vacant lots are being purchased and old homes are being torn down to rebuild new ones.”
Finally, Lonnie Maples of Realty Executives, exclusive real estate agent for Riverside, CA, reported more buyers than sellers and a good supply of inventory. Median price for a house is $435,000 in this fast-growing metro area. Appreciation is estimated at 15-20% in the past year. Average time on the market is 60 to 90 days. Greatest activity is from first-time buyers, he said. Sellers are getting at least 95% of asking prices.
First Quarter Current Market Conditions: Region by Region Results
U.S. South Midwest NE West California*
More Buyers 45% 41% 44% 42% 50% 42%
More Sellers 31% 37% 33% 29% 26% 31%
50-50 24% 22% 23% 29% 24% 27%
Time on Market
0-60 days 45% 40% 34% 51% 49% 57%
60 days plus 55% 60% 66% 49% 51% 43%
Sale vs.Ask Px
90-95% 25% 29% 36% 25% 22% 22%
95% -100% Plus 75% 77% 64% 75% 78% 78%
0-5% 54% 50% 74% 54% 45% 47%
5-10% 20% 23% 20% 13% 21% 18%
10%-15% Plus 26% 27% 06% 33% 28% 30%
No Change 00% 00% 00% 00% 06% 05%
Good Supply 81% 86% 93% 88% 71% 65%
Limited Supply 19% 14% 07% 12% 29% 35%
Yes 39% 37% 44% 40% 42% 43%
No 61% 63% 56% 60% 58% 57%
First Time Buyers 36% 25% 62% 31% 30% 24%
Move-Up & Repeat 64% 75% 38% 60% 70% 76%
*California survey results are included in both U.S. and West results.