Is the real estate market going to continue to improve? Will appreciation and prices continue to go up. Several factors in today's market indicate probably so. The best formula for predicting appreciation and depreciation is Current Inventory / the number of houses sold in the last month equal to months of supply. The country had a big surplus of homes in 2007- 2008 which was caused by builders trying to meet the demand of the home investing mania from 2003 - 2005. That surplus has been continually decreasing as USA's population has caught up with the housing supply. Now that surplus is used up and inventory is tight. Realtor.com just released it's April numbers, which showed inventory has decreased by about 11% since April 2012 and home listing prices have increased by 2.63% nationwide in the same time frame. The average home is on the market now for 81 days... that's pretty short in our industry. No one is talking about the real estate depreciation or recession anymore. We appear to have passed the bottom months ago.
So what does that mean for the future? The number of buyers (demand) continues to increase because of improved employment, low interest rates, and continued immigration fueled population growth. Many builders left the market in the last several years and today's builders are having difficulty meeting the increased demand. Your economics professor loved this stuff: demand continuing to increase, and supply continuing to decrease, so where does a price go? Hold on, for we are going to see appreciation higher than 2.63%
Written By Rob Brooks
