If you’re a homeowner, it’s been a difficult couple of years as home values in most parts of the country have been on a steady decline. After many years of home prices increasing by large percentages every year, the housing bubble had burst and the dream of moving up into a more expensive house or a more desirable area had become a pipe dream for many homeowners. Sellers found their houses sitting on the market for months without even a hint of an offer as inventories in most markets were filled with foreclosures and short sales.
Every month, economists pore over numbers and analyze the housing market looking for trends and hints about the future of home prices. A recent survey showed home price increases in 19 of the 20 major metropolitan areas surveyed. From a macroeconomic level, a recovery is underway in housing but conditions vary greatly depending on the area where you own a home. Just last week, President Obama announced emergency measures for homeowners in five states where homeowners were still in distress. Here are some signals that the housing recovery could be for real where you live.
Improvements in Unemployment: The national unemployment rate gets all the headlines but cities and states have their own measures of unemployment that should matter a lot more to local homeowners. Buyers will be hard to find in cities with unemployment in the high double digits. Conversely, if you live in a place where companies are hiring or expanding, buyers may emerge simply from people relocating to your area. Your local employment situation is a big factor in the recovery of your home’s value.
Improvements in Income: Remember when people not only had jobs but they had jobs that increased their pay every year? We don’t hear about pay increases as often any more but home values in a local area are likely to increase when the average income in that area rises. Stagnant incomes hurt not only buyers, but they make it difficult for homeowners to keep up with routine maintenance on their homes which can also hurt a home’s value.
Improvements in Inventory: It’s hard as a seller to get a good price on your home if several other homes in your area are on the market. It’s even more difficult when the homes for sale are foreclosures and distressed sales because desperate sellers reduce prices. Some real estate analysts believe that one of the biggest problems facing the housing market is that banks are sitting on foreclosed properties instead of putting them on the market. These homes, often referred to as a “shadow inventory,” will be placed on the market over a staggered period of time and could keep inventories high for a long time after the rest of the economy has stabilized.
Improvements in Offers: Bargain hunters have had a field day in the housing market recently taking advantage of great deals from desperate sellers. As the market recovers though, accepted offers will become closer to the listing price of a home. Real estate agents in your area can provide you with statistics about your local market and data showing where homes are selling relative to their list price.
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