The demand for single-family homes
One thing you can count on, no matter the economic condition, from a realtor’s perspective “it’s always good.”
Consider the burst of the housing market when in weeks the value of properties plummeted as some of the country’s largest financial institutions teetered on the verge of collapse. Underwater with more due on their mortgages than their house was worth, some people just walked away from what they had invested.
These were difficult times for many people.
Yet, realtors saw a silver lining for those looking to buy. Prices had tumbled and there was opportunity.
Looking back on those days, the market was filled with foreclosures and short sales. It was a period of unsettlement and without bought it was a buyer’s market.
Fortunately, conditions have changed and now, the market has shifted from a buyer’s to a seller’s market. The days a property is on market have declined and so, too, has the inventory of single-family homes. Single-family home sales slowed during the month of February, not because the demand slackened, but rather the number of homes up for sale declined. According to local realtors, the average time a property is on the market now is about 3.5 months as compared to what is considered a balanced market of six months.
In Warwick, realtors who are accustomed to having 600 homes on the market found the active list reduced to less than 200.
The stories of rapid home sales abound. Sellers are receiving multiple offers and, by some reported accounts, houses are selling within days if not hours of coming on the market. Predictably, this is pushing up prices. The median Rhode Island single-family home price in February was $231,000 as compared to $215,500 last February.
Naturally, realtors see a bright side to this. Sellers are getting what they want and buyers who have done their homework gained pre-approval and are ready to act can get into a house while interest rates are still low and prices haven’t skyrocketed.
Realtors are also guardedly optimistic that regulations implemented after the debacle of sub-prime mortgages and easy credit will protect the market (and homeowners) from another housing bubble. What we’re witnessing is a thawing of the market and higher prices that may reverse the misfortunes of those who bought when the market was at its peak. They could finally be in a position to sell without significant losses.
Naturally, those in the business of selling homes like to have adequate inventory. For the moment, tough, it’s nice to know the demand is there, and while inventory is low, the business is healthy.