The good ol’ days for potential home buyers are now
By Dave Parrish
As we move into the meat of 2013, I propose that this is a year that many will remember in the years to come, as the good ol’ days.
Did I get your attention? That’s right now are the good ol’ days for buyers.
There is no doubt that the past six to seven years have been most trying for homeowners and a time of great concern by those who might have otherwise been enthusiastic home buyers. Since 2006, we have seen declining home prices, increased inventories, foreclosures, and other events that have turned the general public sour on the housing market. Sellers were in for big losses with little realistic promise for a foreseeable market turn. While prices and interest rates were decreasing making homes more affordable than they have been in years, buyers often questioned if it still made sense to buy. Many stood on the sidelines.
During that time the Birmingham metro market has moved from a high of more than 13,500 homes on the market in September 2007 to a low of 7,578 Jan. 1 of this year. Foreclosures as a percentage of units sold peaked in January 2009 at 45 percent of sales and represented on 28 percent in December 2012. Bargain sales are getting almost impossible to find as investors are rapidly soaking them up. Prices are increasing, albeit marginally in 2012. It is anticipated that we will see an average price increase during 2013 of somewhere between 2 to 4 percent.
Interest rates, while above the all-time historic lows, have begun a slow increase. So the cost of a home to buyers is on its way up. Now is the time to buy if you can find a move-in ready home. If you’re looking for a bargain and are willing to buy a fixer-upper, act this year or practice the phrase: “I remember when.”
Homeowners need to look at their situation to see if refinancing will work for them to take advantage of the current interest rates. While they should certainly think twice before doing a cash out refinance, it would be a great time to reduce payments while the rates remain low. The chief obstacle to this will be appraisal values.
Sellers, however, are still reluctant to put their homes on the market, especially if they made their purchase in the 2002-2007 time frame. This will likely remain true until 2015-2016. Inventory shortages will continue for some time until the homebuilder market picks up more steam. We saw a marked increase in builder activity in 2012 and expect that to increase even more in 2013 as demand of quality housing exceeds supply.
While it may feel like the same-o-same-o market, the market really has improved, which means that buyer leverage is waning. When you look at all the factors that impact the affordability of housing and rising rents, now is the good ol’ days.
Sellers that have to sell now will obviously not be feeling the joy.
May the market be with you.