Real Estate Is Finally Bouncing Back
by Kristie Penn
The U.S. housing market crash may be remembered much like the Hindenburg disaster – except the flaming demise of the real estate industry affected almost every American and sent shock waves around the world. Now, however, economic indicators are heralding not just a faint heartbeat, but signs of a vibrant recovery.
After six years of decline, the U.S. housing market is sparking back to life. Single-family home prices increased in 151 out of 384 metropolitan areas in the first quarter of 2012 compared to just one year ago. Though average U.S. home prices declined by 1.9 percent on a year-over-year basis and another 1 percent in 2012, Fiserv Case-Shiller projects a 5 percent increase between the 1st quarters of 2013 and 2014. What is more, they project an uptick in the housing market in the spring of 2013 and that home prices will INCREASE in 358 of 384 metro areas, or more than 93 percent of the markets, during the same time period.
Published in the latest Metrostudy Report, Anthony Crocco made the following comments on the Central Florida market: “Like much of the country, most major Florida housing markets are experiencing an increase in new home activity. In the Orlando MSA (Metropolitan Statistical Area), builders started and closed more homes last quarter than in any quarter since 2008. At the same time, inventory shortages are facing the industry.” Another Metrostudy Report, which covers 65 percent of the country, indicated there are less than 30,000 vacant new homes on the market. In the pre-bubble housing market, there were typically 100,000.
The recent Kiplinger Reports show substantial growth in new construction. “Inventories of single family homes have dropped below 2.5 million units, the lowest level since 2004. This shrinking supply of unsold homes is nudging home prices upward in selected markets,” said David Stiff, chief economist at Fiserv. As the overhang of available inventory continues to fall, the demand for new construction rises. Many buyers recognize the benefits of purchasing a new home – from more stringent building codes to the effects of the green movement and availability of improved energy efficiency features.
Closer to Home
Brevard County can be included among the thriving locations for real estate movement. Positive statistics were reported through Brevard MLS. This includes DOM (Days On Market), which has continued to move in a favorable direction. In 2011, the number of houses sold within 30 days was 2,758 compared to 3,795 in 2012. The supply and absorption rate also fell from a 7.2 month supply in 2011 to a 4.9 month supply a year later. Perhaps the most telling statistic is that the median sales price for a home in Brevard County went from $136,986 in 2011 to $146,223 in 2012.
Strike While the Iron Is Hot
With over a decade of experience in the residential real estate industry, I have seen both ends of the spectrum – from creating waiting lists of 800+ buyers and coordinating lotteries, to hearing objections from skeptical consumers such as, “Why would I build here, this place is a ghost town?” One year later, and utterly amazed, the skeptics drive into the same community that’s now completely sold out.
Even with extensive new construction experience, I can say it was a challenge convincing people to purchase a new home during the downturn. There was uncertainty about the future and no crystal ball that would predict when the housing market would reach its bottom. Fortunately, I’ve maintained multi-million dollar production during the housing downturn and my buyers have been able to reap the rewards of purchasing at or near the bottom. Recently, I’ve seen multiple offer scenarios, back-up contracts and an overall greater sense of urgency. This scenario produces a shift in the supply and demand equation and will inevitably drive prices higher, making it a better time for sellers.
Trends being reported both locally and nationwide indicate the bottom has come and gone. While we’re still in recovery, whether selling, buying or building your home, it’s time to make your move.