Homes are selling as fast as they did during the Housing Boom. Strong demand and still limited supply mean homes are now selling nearly three times as fast as they normally would. The average number of days a listing stayed on the market in April was 46, down from 62 in March and down from the normal pace of 90-120 days, according to the National Association of Realtors.
The sales pace is back to what it was during the housing boom in 2005 and 2006, but the circumstances are of course very different. Back then, it was all about easy money, and now it’s about stiff competition for limited supply.
Some Home Builder are actually slowing production, trying to take advantage of home price gains that are nearing double digits. The average price of a contract signed in the quarter was up sixteen percent from a year ago.
While homes certainly are selling faster, double-digit price gains are not considered healthy, especially when wage growth is nowhere near that. At some point, buyers will hit the wall, unable to afford the homes they want. First-time homebuyers are already dropping out of the market, representing just 29 percent of homebuyers in April, according to the NAR. That is the lowest in two years. Rising mortgage rates, now at their highest in two months, are playing a part, but there are also fewer low-end homes to buy. The number of homes in the foreclosure process is now down nearly 25 percent from a year ago, according to a new report from Lender Processing Services.
Just 18 percent of home sales in April were of distressed properties, the lowest since the Realtors began tracking this number in 2008. Compare that to 35 percent about a year and a half ago. Sales of homes priced below $100,000 were down 10 percent in April, compared to a year ago, while every other price range saw sales gains. Those who can get credit are now competing for what little there is to buy, and pushing prices well beyond expectations. Give us a call to discuss your neighborhood at 303.898.3658.