The Character Of Today’s Real Estate Market
Job growth in the improving economy and pent-up demand are causing both home sales and rental leasing to rise. Though home prices are rising much faster than rents, historically low mortgage rates are still making home purchases affordable. The only headwinds are limited housing inventory, which varies greatly around the country, and credit conditions that remain too restrictive.
Total housing inventory at the end of month rose 9.6% to 1.94 million existing homes available for sale, which represents a 4.7-month supply, up from 4.3 months in last month, which was the lowest supply since May 2005. Listed inventory is 19.2% below a year ago when there was a 6.4-month supply.
Distressed homes - foreclosures and short sales - accounted for 25% percent of sales, up from 23% percent a month ago but down from 34%in February 2012. Fifteen percent of sales were foreclosures, and 10% were short sales. Foreclosures sold for an average discount of 18% below market value, while short sales were discounted 15%.
The median time on market for all homes was 74-days in February, which is 24% below the 97-days in February 2012. Short sales were on the market for a median of 101-days, while foreclosures typically sold in 52-days and non-distressed homes took 77-days. One out of three homes sold was on the market for less than a month.
First-time buyers accounted for 30% percent of purchases in February, unchanged from January; they were 32% in February 2012. All-cash sales made up at 32% of transactions, up from 28% a month before; they were 33% in February 2012. Investors, who account for most cash sales, purchased 22% of, up from 19% the previous month; they were 23% in February 2012.
There was an upward bump in the shares of investor and all-cash closed purchases. These sales result from purchase offers during the holidays when shopping activity by traditional home buyers slows, but investors, who typically pay cash, remained active. This is a seasonal pattern, but we're now seeing a general increase in buyer traffic, which is 25% above a year ago.