The¬†housing market is its strongest in a decade.
According to the National Association of REALTORS¬ģ and the Census Bureau, more than 6 million homes changed hands last year,¬†marking the¬†first time that's happened since 2006.
The rise in home sales can be attributed to many factors. However, three reasons stand out:
Today's mortgage rates¬†are in the low-3s, if you didn't know. ARMs are now in the 2s.
Plus, there's an abundance of available¬†low- and no-down payment mortgage programs, including the new 3% down¬†HomeReady‚ĄĘ loan which has widened the pool of potential home buyers nationwide.
Homes are selling quickly and they're selling at¬†higher prices.Click to see today's rates (Oct 24th, 2016)
Each month, the National Association of REALTORS¬ģ publishes its Existing Home Sales report, a tally of sold homes which have been previously-occupied, or are otherwise not considered as "new construction".
The trade group's July¬†2016 report shows 5.39¬†million homes sold on a seasonally-adjusted annualized basis, a¬†decrease from the month prior but a figure which is above the 12-month average.
Strength in housing has¬†been attributed to¬†low mortgage rates, rising rents, and a simpler¬†approach toward mortgage approvals for many U.S. banks.
Demand for homes has been high -- so much so that supply can't keep up.¬†There are now just over 2 million homes for sale nationwide.
At the current pace of sales, the entire stock of homes for sale would "sell out" by the New Year.
In July, Median Days on Market for an MLS-listed home was 36 days. This is the fewest number of days for July¬†since the National Association of REALTORS¬ģ been tracking such data.
47% of homes sold in 30 days or less in April.Click to see today's rates (Oct 24th, 2016)
The July¬†Existing Home Sales report showed homes selling quickly.¬†Homes typically sold in 36 days last month -- a 14% decrease over the year prior.
But, while¬†Median Days On Market remains¬†an imperfect measure of the housing market's strength, the data sometimes¬†highlights the relative ease with which a seller can sell a home, and¬†the¬†relative difficulty a buyer may face in buying¬†one.
Three main factors affect Median Days On Market -- the economy, median rent prices, and national sentiment toward housing.
When the economy is performing well, for example, consumers may be more likely to take risks, including the risk of buying a new home.
More risk-taking helps homes to sell faster, and moved¬†Days on Market lower.
Rising rents can also cause Days on Market to drop.
When U.S. rents are rising, it puts a strain on the budget of the nation's renters. It also affects the answer to the question "Should I buy or should I rent?"
Median rent is up more than six¬†percent¬†nationwide. In certain housing markets, though, such as San Francisco and Seattle, rents are rising even more¬†quickly than that.
A number of¬†U.S. households have had enough.
Rather¬†than signing new leases, they're choosing to buy new homes instead. And, because many are buying "starter homes", they've found the 5-year ARM to be¬†an excellent budgetary fit.
However, there's a third, less obvious reason why Days on Market can change, and it's linked to home seller sentiment.
Sometimes, regardless of the market's strength, home sellers just feel "less confident" in the market.¬†Now is one of those times.
According to a Fannie Mae consumer attitudes survey, more¬†half of all¬†consumers now think it's "a good¬†time to sell" a home.
When sellers think "it's a good¬†time to sell", it's typically because¬†they believe housing has dropped from a peak¬†and prices are on the way down.
These perceptions often favor buyers.
When¬†sellers are concerned about falling prices, it can result in homes being listed for cheaper prices; and, in homes being sold at¬†"the first reasonable offer".¬†Strangely, though, sellers may have it all wrong.
According to the data, the housing market's going quite strong.
The July¬†Existing Home Sales report shows a national home supply of 4.7 months; and home supply of anything less than six months is¬†believed to put sellers in prime negotiation position over buyers.
Today's housing market is one of the strongest in a decade, in other words, but sellers are behaving like the market's in a downturn. For buyers, this creates opportunity.
Sellers may be currently undervaluing their home. Demand outweighs supply, and values are expected to rise. You may pay less for a home today than you'll pay in six months.
The market looks ripe for a deal.
With mortgage rates ultra-low, sales of homes are soaring.¬†The best deals you find in housing may be the ones you get today.
Get today's live mortgage rates now. Rates are available with no social security number required to get started and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Oct 24th, 2016)
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2016 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)