Autumn Real Estate Forecast: Falling Leaves, Rising Prices
NEW YORK -- The U.S. real estate market, like most economic sectors, has been buffeted by the zig-zagging stock market, rising energy prices and the uncertainty over whether the Federal Reserve will raise interest rates this year, as many experts predict.
Still, the outlook for the autumn residential real estate market seems robust, according to industry analysts. "Recent stock market volatility and seasonal trends may give buyers better financial options and more time to make purchase decisions entering the fall," says Jonathan Smoke, chief economist for Realtor.com. "August data remains positive with regard to overall housing health as both demand and supply continue to grow." In particular, Smoke points to an 8 percent rise in domestic median home prices on a year-to-year basis (to $233,000) and shorter "time on the market" for homes (down 6 percent on a year-to-year basis, Realtor.com reports).
Smoke says buyers and sellers are both trying to find that elusive sweet spot where supply and demand merge in a way where deals are fair to everyone. "This year we [saw] inventory continue to grow in August, and while overall demand is strong, the trend in median days on market is suggesting that the market is finding more of a balance," says Smoke. "This bodes well for would-be buyers who have been discouraged by the inability to find a home to buy this spring and summer."
Many say that though "balance" is desirable, other sweet spots aren't really all that sweet. "I'm seeing higher-income buyers pulling back and buying smaller, less expensive homes, and lower income buyers reaching too high and buying homes they can't afford," says Rick Thorpe, a Doylestown, Pennsylvania-based mortgage broker. "But I'm busy -- there's no doubt about that."
Right now the hottest real estate markets in the nation reside largely in two states -- California and Texas. The former has six of the U.S.'s "Top 10" markets (including San Francisco and San Diego), while the latter has two (Dallas-Fort Worth and Houston). The hottest markets in the country are little changed from July, reinforcing the strength of supply and demand demonstrated by each market on the list, says Smoke.
"Continuing the trend of California domination this year, 11 of the 20 hottest markets this month sit in the Golden State," Smoke says. "California's tight supply and strong economic growth continues to propel its cities to the top month after month."
Still right now, though, balance and stabilization are buzzwords many industry professionals are using. "The Houston market is normalizing," says Sissy Lappin, co-founder of ListingDoor.com, in Houston. "We have lost the majority of the transferee market from oil companies, so the market is stabilized." Lappin says sellers need to be flexible, as multiple offers are down, while homes are taking up to 60 days to sell. "The market is not crashing; it's just returning to a normal market. 2014 was crazy and sellers could dictate the price and terms. That's no longer the case."
In California, and in many other parts of the U.S., fall is known as a "divider" to real estate professionals.
"That is, when the seasons turn, those who continue to find success are the buyers and sellers who are more motivated to make the transaction, rather than the casual "summer-goers" who "like to go out and see what's on the market as an adventure and go to open houses as a hobby or casually list their homes to see what offers come in," says Virginia Clark, an agent with Carrington Real Estate in Orange, California.
"Sellers looking to target these more motivated fall buyer need to maintain a "show-ready" home -- free from odors, clutter, laundry on the floor, etc. -- so that when the buyers come in, they can visualize themselves in the house and want to move quickly on the sale," she says.
That's the ticket, for both buyers and sellers in the U.S. real estate market this autumn. Be aggressive, be ready to pounce, and be determined to cut a good deal -- those are the hallmarks of what looks to be a fairly vibrant market over the next few months.