Housing sales decline on month
March 27, 2014 at 11:02 p.m.
Updated March 26, 2014 at 10:27 p.m.
The market report shows that housing sales for the month of February declined by 13.3 percent from the same month a year ago. While it is not unusual to see a variation when comparing one month to another, the amount of this decline may cause concern. The year-to-date sales were essentially flat with the same period last year.
Other trends to watch are median price and inventories. Median price continues to rise, and the pace seems to be accelerating. Year-to-date increase was up 11.8 percent over last year.
Inventories continue to decline. There were 12.9 percent fewer homes on the market than last year.
It is interesting to note that we are experiencing similar trends on the national level.
The questions are: How does this affect buyers, and sellers and what is creating this market? When there is more demand than supply, prices of any commodity tends to rise. We certainly have experienced "demand push" of prices in this market. Inventories have been low for several years, and prices have moved up. There are perhaps reasons to think that there will be a leveling off of steep price increases.
Buyers are beginning to experience a "affordability ceiling". A buyer's purchasing decisions
are constrained by a number of factors: personal income, available cash, other debt and the mortgage process. While the first three are in the buyer's control, the mortgage process is not.
During the last five years, the mortgage companies have modified their underwriting requirements to avoid the problems that caused the great recession. Since the first of the year, the federal
government has initiated new rules and regulations that further restrict a buyers ability to get a
mortgage loan. Many in the industry feel that lack of job growth coupled with government regulations will cause the housing market to level off this year. Don't be surprised if we don't experience a similar leveling off here.