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Future of the Future

There has been a lot of uncertainty in the marketplace lately.  In the news there are reports of recovering taking longer, recovery happening now and even announcements that home sales are up.  So what are we to expect, or believe when it comes to the future of the housing market?

Although watching the news is helpful for learning the overall health of the market, you will want to focus your attention to local market inventory, health and activity as this will directly affect immediate pricing.

Months supply of inventory, which measures how long it would take to sell current supply of active listings at the current pace has been on the decrease for the past few months for both attached and detached housing.

Median pricing for detached single family homes have also been on the rise, as well as the median prices for homes under contract and closed properties.  For attached homes, which include condominiums and townhouses, median prices of active properties and sold have both risen.  However, median prices for properties under contract have declined hinting that buyers are purchasing at the lower end of the market.

Considering that spring is generally a busier time of the year, these numbers should be taken under careful consideration.  Additionally, a lot of discussion also has been around the “shadow inventory.”  This is the inventory of foreclosed homes not yet on the market.

Even without knowing how much inventory this potentially is, the simple truth is that foreclosures will continue to come to market.  For this reason, buyers will continually seek out the “bargains” whether they are foreclosed properties, short sales or aggressively priced homes.  Even with the spring surge currently occurring, without a steady and growing influx of buyers coming to market, the recovery that has occurred thus far could be short lived.

As always, pricing and location will play significant roles for sellers and buyers on the market.

There is no guarantee as to how long the current environment will last.  However other market indicators can give insight as to what possible expectations are.  Below, is information that I sent out to clients last month regarding consumer factors that influence the buyer mentality for the future.  Most of the data was retrieved from the Federal Reserve or from other governmental organizations.

Annual Consumer Factors (click to view full scale)

As you can from the annual data, unemployment slowly started stabilizing, and not reported in this data are the numbers from this year which has looked hopeful.

Residential loan delinquency and credit card delinquency have also curbed with the latter decreasing.

Economic Data v Unemployment v Median Prices (click to view full scale)

In Figure b-1, you can see how median prices for the Chicago area reacted in recent years with regards to unemployment, inflation as well as performance measured against S&P Returns.

So what can we expect?  As foreclosures continue to come to market (albeit in no great quantity at once – more likely released in slowly over time) and with few buyers with above average expectations, recovery will take the form of stabilized prices in some areas, decreased market times in others, and smaller loss of value in comparison to at higher risk areas.

For many, it is price it right or don’t bother to sell.  Hard lesson learn when playing with so few buyers available.  Otherwise, many have opted to wait out the market and either live  in their home longer or rent it out until the current environment is more amicable.

Sherwin is a REALTOR® in the Chicago & Suburban area with @properties. Questions can be forwarded to Sherwin Sucaldito. Originally posted at Realty Evolved

 


Sherwin L. Sucaldito, REALTOR®, GREEN, ABR, CRPM
@properties
The Institute of Luxury Home Marketing
Green REsource Council, GREEN
Accredited Buyer’s Representative , ABR
Certified Residential Property Manager, CRPM

Creative Commons License Future of the Future” by Sherwin Sucaldito is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.

“Clock” photo by Clix.

Realty Evolved