Residential real estate prices have been on the rebound since late 2012. Homeowners who felt locked into their property during the height of the recession should seriously consider listing his/her residence now that prices have seriously rebounded. The Case-Shiller Index illustrates some of the good news.
Case-Shiller Index Tracks Gains
Standard & Poors established the Case-Shiller Index in the year 2000. It is a measure of single family home selling prices in the country’s 20 largest markets. Nationwide, the index shows a 2.1-percent increase from February to March. This is the largest single-month increase in the 13-year history of the “Case-Shiller.” April prices show a year-over-year increase of a substantial 12.1-percent. This is the best increase in seven years.
Numbers specific to San Diego may be of particular interest to La Jolla homeowners. In May, the average selling price of an existing single family home was up 2.57-percent in just one month. The year-over-year comparison is equally as impressive. From May 2012 to May 2013, San Diego prices are up a whopping 17.28-percent.
Of course, such dramatic increases are not sustainable for the long-term. Right now, there is a near-perfect combination of record-low interest rates, numerous buyers, and good prices for sellers. In a sense, everybody is happy. However, potential sellers should realize that there are so many buyers bidding up prices right now because many were shut out of the market for years following the recession. Prices dropped and lenders tightened standards to a degree that very few buyers could qualify. Now the market has solidified and lenders have confidence again. Buyers are arriving in droves. However, many of these buyers are finding homes and the supply of buyers is likely to dwindle in the not-so-distant future.
Record-Low Interest Rates
At the same time, low mortgage loan rates mean more buyers have the purchasing power to buy your home. However, rates are beginning to rise, thus eroding some of that buying ability. For example, with a 30-year mortgage at 4.0-percent, a buyer qualifies for an average of $12,000 less house than he/she does at the recent average figure of 3.3-percent. At present, rates are still low enough that buyers are likely to pay more for properties that they really favor. However, if mortgage interest rates climb much further, real estate values could quickly soften.
Many Homes Being Sold
More homes being sold means that the supply of buyers will likely drop in the near future. For example, in May, homes sold nationwide at an annualized rate of 476,000. This was up 2.1-percent in just one month. Compared to April of last year, the number of homes sold was up an eye-popping 29-percent. What this may mean for the La Jolla seller is that the pent-up demand that created a glut of buyers is a temporary phenomena. Therefore, “now” may be the time to sell now that prices have rebounded and the supply of buyers is still sufficient to maintain demand.
New Homes Now Being Built
Home builders are now also arriving to meet demand. The recession had a severe impact on the home construction industry. Now, as existing homes regain their value, new homes become more competitive price-wise.
New home prices are increasing as well, but not at the same pace as that enjoyed by existing homes. For example, in May, the average new home in the United States sold for $263,900. This represented a year-over-year increase of 10.3-percent. For many buyers, the increasing supply of new homes will siphon off some of the demand for existing homes. Again, it is incumbent upon the prospective seller to act before demand softens for this reason as well.
Selling? Wait No Longer
For La Jolla homeowners that have been wanting to sell for some time, the news is very good. Prices have rebounded to the point that many can realize a tidy profit on the sale of their homes. Interest rates are still low enough to qualify more potential buyers for your property. In fact, mortgage loans are still such a steal that buyers are often willing to pay more for desirable properties.