Low mortgage rates
Currently, the 30 year fixed mortgage rate on the Zillow’s Loan Mortgage Marketplace is at 3.80 percent. Erin Lantz director of mortgages at Zillow said that even though the rates have increased over the past week, they’re not going to suddenly skyrocket. He said, “Even if the Federal Reserve starts to scale back its stimulus program, the Fed will still help keep rates low for the remainder of the year in order to accelerate the housing market recovery. As the Fed withdraws support and the economy recovers, we expect rates will rise gradually over the next 18 months.”
As of February, a little under 2 million homes were for sale nationwide. This is a supply of less than five months. A six-month supply is generally considered normal. A year ago the supply was 6.4 months. There are currently 12 markets with a supply of homes that are less than three months. Increasing home prices should lead to more inventory, but will prices increase enough to cause the for-sale inventory to expand again?
The demand from home buyers is growing faster than the supply of homes for sale. Many buyers are using unconventional ways to find their dream homes. For example, their ringing the doorbell’s of homes they like, writing notes to homeowners, and making offers on homes that are not on the market. There’s also a lot of activity on Zillow’s Make Me Move section. There are currently 148,000 listings and contacts to owners have increased 132 percent over last year.
Not only are home buyers bidding against other buyers for homes to live in, but buyers are also bidding against investors in places such as Las Vegas and Tampa. Currently, California, Boston, Washington, Seattle, New York, and Texas are experiencing bidding wars for their existing inventory. And in the states where investor demand is strong, investors are outbidding first-time buyers looking for entry-level properties.
Steve Murray, editor of the Real Trends Housing Market Report, said, “May 2013 sales of new and existing homes continued to show strength across all regions and are evidently shaking off the low inventories in most markets. The two regions of the country with the lowest average sales prices, the South and Midwest, continue to outperform other regions in terms of unit sales increases. The average price of homes sold was up solidly again due to supply and demand imbalances. As this report and other housing indicators show the scarcity of inventory and buyer demand are creating a situation where prices are advancing at far greater rates than had been predicted due to high levels of housing affordability and restricted inventory.”