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Bad news for buyers, good news for sellers

National Association of Realtors reports housing inventory continues to drop, sales increase

Created date

March 26th, 2013

The National Association of Realtors reported in January that home sales had risen 9% for 2012, the highest annual total since 2007. The New Jersey Association of Realtors reports that regionally, existing-home sales in the Northeast rose 3.2% and are 10.3% above December 2011. Meanwhile, housing inventory continues to drop despite the increase in home sales. This means different things to home buyers and home sellers. Buyers have less choice and less room for price negotiation. They re also seeing prices increase, reports The Wall Street Journal. Sellers, on the other hand, are reaping the rewards of the market working its way back to normal supply-and-demand dynamics. Less inventory creates urgency which, when priced according to market prices, will help increase home prices, says Laurie Williamson, personal moving consultant for Seabrook, an Erickson Living community in Tinton Falls, N.J., and 12-year real estate agent. As a personal moving consultant, Williamson recommends trusted resources, like real estate agents and moving companies, to people selling their house and moving to Seabrook.

Older homeowners have equity

One reason for the decreased housing inventory is that ten million homeowners have less than 20% equity in their current residence, meaning they can t easily trade up to their next house, according to The Wall Street Journal. But those numbers play in favor of older homeowners, who are more likely to have lived in their house for 30 to 40 years and paid off their mortgage. While many younger or even middle-aged homeowners don t have enough equity in their current house to sell and move up to the next step, many of our prospective residents have been in their houses for 20, 30, 40 years and have paid off their mortgage, says Seabrook Sales Counselor Susan Coulson. They don t face the same hurdle as younger homeowners, so they are in such a better situation to sell and take advantage of the low inventory, Coulson says. Older homeowners also benefit from the decrease in new-build inventory from 2009 to 2011. With less new-home inventory added to the market, older homeowners can cash in on the increased demand without the competition of new homes. However, says Coulson, builders are beginning to rebound from the lull, so I encourage our prospective residents to join our priority list now because now is the time to sell. Seabrook s priority list acts as a waiting list to reserve one s place in line for the apartment home of their choice. If priority list members turn down an apartment home, they don t lose their place in line.

Advantageous interest rates

Buyers and sellers both can take advantage of the low interest rates we ve seen for the past few years. Historically, the U.S. interest rate averaged 6.2% from 1971 to 2012, with an all-time high of 20% in March 1980. But in January of this year, 30-year fixed rates reached 3.38%, and 15-year fixed rates reached 2.66%, according to Freddie Mac s Primary Mortgage Market Survey, which surveys lenders each week on the rates and points for their most popular 30-year fixed-rate, 15-year fixed-rate, 5/1 hybrid amortizing adjustable-rate, and 1-year amortizing adjustable-rate mortgage products. Despite low housing inventory, these low interest rates encourage potential buyers those who are in position to enter the housing market and look for their next home. What s more, the Federal Reserve, one of the two authorities for interest rate decisions, aims to spark growth by keeping rates exceptionally low until at least mid-2015.