With the dark days of the mortgage crisis behind us, the real estate industry is continuing to enjoy increased gains in home prices, while the amount of inventory steadily declines, making owners of marketable properties the beneficiary of an improved economy. The real estate market moves as brisk pace as a new demographic group begins to settle down to raise families. The result is a good market for sellers, with buyers competing to snap up the limited inventory of homes that are currently available on the market.
Climbing Home Prices
The Unites States is experiencing some unevenness in population growth, which affects the prices of homes. In the East, Southeast and some areas of the South, communities are losing population as young workers go in search of good jobs. This decreased has caused some lag in home prices in areas outside of large urban centers. In western states, where employment in tech companies and other industries is growing, population has increased steadily over recent years. Washington, Utah and Nevada have seen significant boosts in population. In these areas of fevered population growth, home prices are at a premium. In June, Washington State saw a 12.7 percent increase in home prices.
Decreasing Inventory Numbers
On the other side of the home price equation, the amount of inventory in the 2nd quarter of 2017 slipped below a 30-year low. Much of the problem in inventory is fueled by decreases in the number of housing starts across the country. The construction of new housing has faltered, hindered by problems of finding experienced workers and the increased cost for materials. Another factor in the decreasing inventory in real estate is the increasing numbers of baby boomers who are opting to stay in their current housing instead of downsizing to smaller, more easily maintained properties as they age. In addition, owners of properties that were purchased at much lower prices in past decades are reluctant to let these properties go when they can garner a flow of income from the rental market. These factors have kept the number of available properties for sale down significantly, driving up properties and sometimes causing “bidding wars” for properties in desirable areas.
Individuals in the real estate industry are likely to see an increase in clientele as the millennial demographic begin to start their families and purchase larger residences. Homeowners who have held onto their properties, waiting for a better economic climate and easier credit to help sell their homes, are likely to be more willing to enter the marketplace to take advantage of better conditions. These factors mean that there will be increased sales in the years to come with a broader range of inventory that will mean a brisk purchasing climate. A stable economy with growing income levels in coming years will help to facilitate this favorable market.