October was the most active new purchase month in the past two years, giving us some great momentum going into the winter. With inventories at 10-year lows and buyer activity building, this should be a wild winter for buyers chasing their perfect home.
To give you a snapshot for the cause of inventory decline, over the past 90 days sales were up 22%. Meanwhile, the number of new listings placed on the market fell 6% compared to last year, which accelerated area appreciation rates.
Appreciation Momentum is growing
2012 vs. 2011 % Change in Price per Square Foot – SE Michigan
These growth rates are a combination of fewer lower-priced homes for sale and a growing rate of appreciation. Separating the two is not an exact science, however it appears that at least a third of the growth rate (or 6%+-) is a true value increase.
Should I stay or should I go? A great song by The Clash, but with prices rising, also a good question for todayʼs Sellers, “sell now or wait?” Since housing is not just about the financial gain, the answer depends as much on a Sellerʼs personal housing goals as timing the rate of appreciation. However, if they are looking to move up to a larger home, there is no doubt they should be looking now. As the full report illustrates; the math is clearly in the sellerʼs favor!
Right now, a first-time buyer has all the best pieces in their favor to buy. Rising rental rates, low home prices and low interest rates make a once in a lifetime combination. Those downsizing should consider the future interest rate increase, which makes a move today worthwhile. A 1% rise in interest rates will offset a 12% rise in appreciation. We anticipate strong appreciation over the next couple of years, but not 12%. Though, interest rates most certainly will rise 1-2% in the coming years. Anyone who is considering selling in the next few years should be making plans now, so they can test the market in 2013.
To read the full report click here-October Market Update