Statistics. Stats. Charts. Lines. Graphs. Models. All words that you wouldn’t quickly associate with Real Estate. However, they are all REAL tools that we have to use in order to best understand this market and offer the best advice to our clients. Understanding market statistics is a crucial role that your best Realtors know how to do well.
“What will the market be like this year?” is a question Kim and I hear often. Here are the few factors that we consider when we try our hand at predicting what 2014 Richmond Real Estate might be like this year.
At the beginning of 2013, money was in the mid 3% range. This was true through the spring, and then we saw a gradual climb to their current levels in the mid 4% range. Experts are predicting a flat year this year. While there could be an occasional dip in rates, everyones best guess says that rates above 5% are soon to be the new norm. The days of 4% interest rates are stories we will one day tell our children’s children. My parents told me that when they bought their first house in the early 80’s, that they borrowed money at 16%. That, my friend, is nuts. We are living the dream.
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The official end of year numbers for ‘13 are not in yet, but all signs point to them being similar to how ‘12 ended out. The inventory count in November ‘12 and ‘13 were almost even, showing just above 5,000 homes available “for sale.” While their numbers may show themselves to be similar years, the stories are different. 2013 proved a year to be one in which inventory counts barely rose, yet the demand for housing was dramatically increased. All in all, the inventory levels in 2013 were a multi-decade low and 50% BELOW the highs of ‘09.
If we have a situation like we did last spring (in which demand exceeded supply), inventory shortages could be even more extreme this year. This means that their accompanying conditions (short marketing timelines and multiple offer competitions) could be even more common. Buyers were somewhat shocked by these conditions, and caused a handful of missed opportunities. Don’t let this happen to you! Get out ahead of the curve, and start understanding what inventory is like in the markets you are interested in. Check out these charts (OUR STATS PAGE HERE), and come back often, as they are continually being updated – you can see change right before your eyes!
In 2013, the Dow began at 13,000. Now, at the beginning of ‘14, it is closer to 16,500. The NASDQ, in ‘13, began at ust over 3,000. And currently, at the beginning of ‘14, we are just over 4,000. While it is too simple (and, frankly, not wise) to draw many predictions about housing demand from stock indexes, it does at least give us an indication that Wall Street shows our country’s economy at a better condition than it did a year ago. As confidence goes up, so do comfort levels when it comes to people making important decisions.
Also, the S and P Homebuilders Select Industry Index change in the past months is something of note. In 2013, it ROSE by 20%. This tells us that Wall Street is feeling better about owning stocks of the national home builders.
We are in a time in which we have both tight inventory and historically low rates (even though they have begun to rise). National economic predictions are estimating there will be a 5% increase in house prices. If you are hoping to enter in to the 2014 market, be aware that selection (especially in mature “stable” areas) will be low and opportunity to purchase a quality home should be taken very seriously.