The Market Has Been on Fire for 50+ days…Why??

 

Since the beginning of March we have seen unprecedented demand from buyers and an unprecedented decrease in inventory to purchase. Demand is low because less people are willing to sell at what may be all time lows.  If the home is priced within market value range, there will be multiple offers, almost guaranteed.

 

The amount of offers depends on the sales price.  The true conforming loan limit of $417,000 is going to have the highest demand and likely the greatest amount of offers.  Most people have found that they can qualify for this amount with a minimal down payment and pay almost the same as they do in rent.  Therefore, anything under $450,000 is really moving fast, day 1-7 and close to full price.

 

The mid-range price points $500k – $700k are also moving quickly if priced right.  If a seller’s asking price is within $10,000 of market value, the home will fly off of the market.  They are moving fast, but not as fast as the 450k and under prices.  There are just less people in this price point.

 

The upper end market consisting of high conforming loans and jumbo loan buyers is still being heavily scrutinized.  Still we see an increase in demand.  These buyers are still weary that they are going to overpay as the price point still may have a ways to go on adjusting.  The asking prices must be within $20,000 of market value or they risk being overlooked.  There just isn’t the same fear of loss in this category.

 

With all that said, I still cannot confidently say we are in a market recovery.  The only reasons I can see for increased demand are: some volatility in the interest rate market as a result of Federal intervention (Bernanke QE3 Report), increased consumer confidence following a bullish stock market, fear that the market may be bottoming and buyers might lose, Europe has been out of the media until recently, Israel has been softer on news until recently and the spring selling season is almost always a given.

 

Now stop….if we don’t let our minds get brainwashed, we realize the real facts haven’t changed.  The big 5 bank settlement “Robosettlement” is still going to lead to more foreclosed inventory leading to forced supply where standard sellers would naturally slow inventory.  There are still millions of homeowners not paying their mortgages or upside down.  Billions of dollars in 7 year ARM loans were written in 2006 and into 2007, do the math, they will adjust through 2013.  The unemployment percentages are still through the roof and we are getting lower job ratings than expected.  Our stock market is now correcting as companies pull back on hiring.  Europe, China and Israel are all rearing their pretty heads again.  China recently announced lower than expected GDP, Israel still might bomb Iran and let’s face it, the Euro should be squandered.  Germany leaving the Euro would devalue it greatly and resolve much of the problem for the remaining countries, but this solution is still a variable certainty.  Oh yeah….we are still 15 trillion in debt and don’t know who are next President will be.

 

The facts are the same as they were before; society just isn’t paying close enough attention.  Even I am questioning…Is this really real??  Time will tell.

 

This demand we are seeing now is likely a false demand, but if you want to sell now….sell now and price it right.  You will have multiple offers fast.

 

All things considered, I am not yet sold on the recovery.  I will say for the first time in a long time, the market feels and looks GOOD.  I’m with you, I hope things improve and stand up to the test of time.  Let’s look at things in another 10 weeks.  My guess….we may realize that the numbers don’t lie and may be back to the pre-demand era.

 

Your Thoughts?

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