The past year or so has been a very interesting real estate environment. While interest rates have remained incredibly low inventory has also remained incredibly low and because prices continue to rise it has been more and more difficult for new, especially younger buyers, to purchase a home. Let’s break this down. Why are there so few houses on the market? One explanation is that people are remaining in their homes longer. Unless you have to sell because you are relocating, divorcing and must divide assets or there has been a death, most people find it makes more financial sense to stay put. Rising prices make the prospect of a huge capital gains penalty unpalatable and looking at what you might pay in property taxes for a new, more expensive house, compared to what you are paying now also prevents many from selling. This is because property taxes are reassessed, for the most part, only when a house has been sold.
As for buyers. For those that can afford to buy a house the competition is fierce. More and more homes sell over asking in multi-offer scenarios. Many get discouraged and just give up putting in offers. Or, the offered price is within their means but by the time the bidding ends they are over their max.
But, people do want to buy now because it is certain that the interest rates will be going up soon. The Federal Reserve has been very cautious about raising them and has closely monitored and analyzed all the factors that figure into the decision to raise interest rates. Most measures (employment, GNP, manufacturing, etc.) are showing signs of sustained strength so it is pretty much a sure thing that interest rates will start to tick up. Unless the housing market loosens up, even more buyers will have to sit on the sidelines.
Drilling down to our little inthecanyon paradise we are actually seeing an increase of homes on the market. There was a 31.5% increase, from 22 to 29, homes for sale from 2015 to 2016, with a 2% decrease in sales price. Comparing the first 7 months of 2015, 2016 and 2017 we are also seeing increases in homes on the market. 33% in 2016 over 2015 and 18% from 2016 to 2017. Prices increased by 21% from 2015 to 2016 but, so far the average price is down slightly from 2016 figures. Like we said… an interesting market.