Wanna know what recent stats say about the housing market for the Summer of 2012? According to the National Association of Realtors (NAR) the number of sales agreements for formerly tenanted homes in July of this year increased b 2.4% to 101.7. This is even more impressive than June's reading of 99.3. The Greater Boston Association of Realtors® (GBAR) published their Market Update for July and you'll be pleased to know that Beantown's overall number of closings for Boston homes for sale rose 27.4%.
To put some of these seemingly arbitrary numbers into perspective, a noteworthy reading is 100. The index currently is sitting pretty at 12.4% higher than July of last year. Boston's economy has been picking up steam after a slow start in 2011. Boston real estate is ahead of the curve in terms of where the nation is as a whole.
The best way to predict where real estate market is going is by the number of signed contracts. This is because of the 30-60 day gap in between the signing of a contract and the official closing. As stated earlier, Boston is doing pretty well on a few levels. Unemployment wise we've been on a steady decline since 2010 and we are gradually recovering. Interest rates for housing are just about the lowest they've ever been, which means it's the optimal time to buy, but sadly there's just not quite level of inventory of things to choose from that people are hoping for.
The exciting news is that the NAR reported that contract signings were not just up in a spattering of places, but in every region of the United States, minus the West. The West is unfortunately experiencing a housing drought.
It looks as though things are looking up for lots of folks in the housing market right now. Everything seems to be trending on the up and up, including the average rate on 30-yr fixed mortgage rates, which has been steadily less than 4% for all of 2012. Also on the upward bound list are the prices of homes. If the overall prices of homes continues to rise, this could cause sales in the near future to increase as well.
What all of this information means is that though things are looking better, we are not out of the clear just yet. Some economists fear that sales of formerly tenanted homes will only rise 8% this year to 4.6 million, which is much less than 5.5 million yearly sales amount that is considered beneficial for a thriving market.
What's up with that prediction? Why would we still fall so far below where we should be if things are looking so positively right now? It's because of the housing supply. If we look at how many homes were for sale in July, the total was only 2.4 million, which is 24% less than in 2011. It would take approximately 6 months to deplete that inventory at the rate we are going right now. That's only slightly more than the six months' supply that usually is available in a stable economy.
Courtesy of USA Today