From a recent - National Homebuilders Association Press Release (May 26, 2015)
Sales of newly built, single-family homes rose 6.8 percent to a seasonally adjusted annual rate of 517,000 units in April, according to newly released data from HUD and the U.S. Census Bureau.
“Sales are moving forward and our builder members are telling us they are starting to see more activity as more buyers get off the fence and enter the marketplace,” said Tom Woods, chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, Mo.
“Following an unusually low sales report in March, today’s numbers are consistent with other data we’ve seen recently and indicate a continuing, gradual improvement in the housing market,” said NAHB Chief Economist David Crowe.
Regionally, home sales were mixed, rising 36.8 percent in the Midwest and 5.8 percent in the South. The Northeast posted a 5.6 percent decline and the West fell 2.3 percent.
The inventory of new homes for sale edged up to 205,000 units in April. This is a 4.8-month supply at the current sales pace.
In our area in southeastern-Michigan we can certainly see this trend. While sales of used homes are up too, new homes are selling as fast as they can be built. We still have a “tight market” in Michigan, with more buyers out looking than there are houses for them to look at. Multiple bids and bidding wars for good houses are not uncommon. Houses that are in move-in-ready condition are selling for at or above asking. All of that is good if you are a home seller, but quite frustrating if you are trying to buy.
The tight market has also impacted the rental and lease markets, with both experiencing rising asking prices and very low inventory. Many of the people who lost houses during the great recession are still living in leased homes while they rebuild their credit. It is very difficult to find lease properties, especially those that might accommodate a larger family.
So, what is a buyer to do? Well, for one, this is not a time to be “testing the market”. You are just wasting everyone’s time if you are out looking with no real plan to buy. You need to be pre-qualified and in a position to make an immediate offer. There are no “contingent upon sale of buyers home” offers being accepted these days and no sellers will even look at lowball offers. You should know exactly what your limits are, in case you get involved in a multiple offer situation and have to make your “best and final” offer. You should be prepared to walk away from homes that you really can’t afford, rather than getting swept up in the bidding wars.
You should understand that there will be cash bids that win houses (especially those under $200,000), even if they are a little lower than your bid with a mortgage, because the sellers don’t have to worry about you being successful in the mortgage process and many of those bids will be made without inspections and with a quick close. Most of all, you need to be patient. You will likely lose a d few bids before you have one accepted. Accept that and move on.
As for would-be sellers, now is the time to go for it. We are back to just about pre-recession values, so your house is worth more than ever. Waiting longer, so that you can wring just a little more out of the market also means that the next place that you are planning to buy is going up too, so it’s a wash. The key it to properly price you house; not to overprice it, in hopes of getting a little more. An overpriced house will just sit there; while a properly priced house may result in one of those bidding wars. The best place to be is to have a move-in ready house that has been well –maintained and has been updated. Hopefully you enjoyed those updates as you made them and now they add value in the market.
If you’re looking for a new-build home, don’t be surprised if you stop into a new construction site and discover that all of the sites and homes to be built on them are already sold. It’s that kind of market. If you do succeed in getting in on e one of these new developments, your next challenge is trying to coordinate the sale of your current home on a timetable that will mean only one move. That’s extremely difficult, so have a plan “B” in mind for temporary living somewhere, with your stuff in storage. It’s a pain in the short term, but hopefully worth it in the long run. After all, you’re getting into your new move-up house or maybe your retirement home, so you’ll probably be there for a while.