Housing Market

The Housing Market Has Surpassed Expectations So Far in 2017

What’s causing this boost and will this trend continue?

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The real estate market is showing strong growth and stability as we move into the second quarter of 2017. Existing home-sales in January totaled 5.69 million and increased 3.3 percent, marking the strongest month in sales since February 2007, according to the National Association of Realtors. More so, the median-existing home price increased 7.1 percent from January 2016. Despite the Federal Reserve confirming a raise in interest rates, consumer confidence is resilient as hiring continues and the unemployment rate hovers around less than five percent. And as data illustrates, this confidence translates into more Americans now purchasing homes as the economy shows greater prosperity.

Alex Sifakis, president of JWB Real Estate Capital in Jacksonville, Florida, says that the Jacksonville housing market is showing no signs of slowing down as home prices continue to rise and more buyers enter the market.

“The first two months have been hot. Prices are up 8.76 percent year over year, surpassing national statistics, and inventory is way down, which means future price increases are coming,” said Sifakis.

To get a sense of what to expect from prices, experts in the real estate market use “months of inventory,” or the total number of months it would take to sell all the listings currently on the market if no new listings appeared.

“January and February averaged 3.9 months of inventory compared to last year in January and February which averaged 5.2 months of inventory. That is a huge decrease, and low inventory levels are very good indicators of future price increases,” said Sifakis.

Especially in the South, existing home sales are slightly higher than the January national average, as prices rose 3.6 percent compared to the national increase of 3.3 percent. More so, January median prices are up a staggering 9.2 percent from a year ago, according to the National Association of Realtors.

As more buyers enter the market, competition will increase, ultimately leading to rapid home sales. In January 2016, property typically stayed on the market for an average of 64 days. In January 2017, that average was only 50 days. Jeff Ross, Memphis-based franchisee of home staging company Showhomes, is experiencing the firsthand effects of homes selling like hotcakes in the Memphis market.

The most profitable part of Ross’s business is a service called the home manager program, which allows people to live in large, high-end properties for cheap in order to keep up a “lived-in” appearance. In 2008, when Ross started his business in Memphis, he and his wife generated revenue entirely from the home manager program. Now, as inventory levels fall, their business is transitioning to include more home staging. Through the rest of the year, Ross predicts that staging will grow by an additional 50 percent.

Competition for homes is predicted to increase even more across the country as peak selling season is right around the corner, according to Lawrence Yun, National Association of Realtors chief economist. Naturally, as more buyers compete for homes in a seller’s market, affordability will continue to worsen as months of inventory remain low. However, the market may see rebalancing later in the year as development catches up to the new demand.