In the years since the housing crash, economists have kept a close watch on the housing market, as it is a significant indicator of the overall health of the U.S. economy. The huge number of foreclosed properties that flooded the market after the bubble burst created a buyer’s market across most of the country with historically low prices, but many owners are now coming out from underwater on their mortgages and are seeking market rate when selling their homes. With fewer “distressed” properties on the market, lack of affordable inventory has become as issue across much of the country, and the median prices for homes in some markets, such as San Jose, Calif., and Denver, Colo., have surpassed their previous peaks. RealtyTrac reports that the number of foreclosed homes actually increased in January of this year, but it is too early to tell whether that will have an influence on getting more inventory on the market.
RealtyTrac Vice President Daren Blomquist said in a press release that getting more inventory on the market is crucial, and he predicts that the supply situation will improve slightly in 2015. “I think we’ll see numbers tick up. It’s kind of a seesaw right now between supply and demand. One of the reasons 2014 saw fewer sales [was] not so much lack of demand but lack of supply, especially in the price range the majority of buyers were looking for,” Blomquist said in the release. While low supply is fueling a rise in prices, consumers have also seen their incomes increase at a much slower rate than home prices, making purchasing a home further out of reach. According to RealtyTrac,the median price for a home in the U.S. grew by 17.3 percent over the past two years, whereas the median weekly wage increased by a mere 1.3 percent. Home price appreciation outpaced wage growth in 76 markets in the U.S. in that time period, most dramatically in California, which saw home prices grow by a 141:1 ratio over wages.
Industry experts are cautiously optimistic about the market during the remainder of the year. With national inventory of existing homes is sitting at a five-month supply, with some regional inventories much lower (Seattle is hovering around a two-month supply, and some neighborhoods have even fewer homes available), prices continue to rise. Rick Sharga, executive vice president at Auction.com, told RealtyTrac that “Until these situations change, low inventory will keep sales relatively flat, and keep prices relatively high.”
If you are interested in buying or selling a home in the Seattle area, contact your local real estate agent today!