Is the home sales industry joining the economic upswing? It’s tough to tell. Residential property values across the US increased by only 0.2 percent in January, and observers are predicting that growth will be even slower in the coming months.
According to Zillow, the home value index is showing the smallest monthly increase since May of 2012. Experts attribute this to greater inventory.
Inventory and home sales
According to Zillow, the number of homes for sale has increased by 11.1 percent since January. This is the fifth consecutive month that inventory has risen.
Inventory rose in a majority of the largest metro areas in the country. For instance, houses for sale in the Las Vegas area rose 42.8 percent, and Sacramento’s hike was 26 percent.
There were fewer bidding wars because home buyers had more inventory from which to choose. When inventory is small, home values appreciate faster. Further appreciation is looking less likely in the near future, according to experts.
Despite that apparent trend, builders continue to build. This will give buyers even more leverage, but it doesn’t hold out much hope that the market will retain its value.
Appreciation is expected to increase the most in Riverside, California and Orlando, Florida. Those are two regions where home buyers should expect a healthy jump in home values.
Miami market exhibiting growth in 2014
Miami is another area that’s experiencing market growth. The median sales price for homes increased by 18.1 percent, according to the Miami Association of Realtors.
The median sales price for condominiums rose only 12.9 percent. Even though sales prices are increasing, the growth is still considered moderate, which makes the market balanced for buyers and sellers in Miami.
Florida in general has been a strong market and is expected to remain strong through the year. Though Miami real estate has increased 2.7 percent for single-family homes and 4.6 percent for condominiums, the median sales price for single family homes across the state was up 13.3 percent since last quarter. Median sales price for condominiums was up 18.8 percent from the previous quarter as well.
Much of Florida’s growth is being driven by foreign buyers who pay cash. Nearly 90 percent of all foreign buyers do so, but what’s also noteworthy is that nearly 60 percent of all sales were made in cash.
This number is nearly 15 percent higher than a year ago. In sum, more people have the cash to get what they want without assistance from banks.
What to expect in the future
As 2014 unfolds, pundits will have more to say about how the real estate market should play out. Their current expectation is that markets will respond except in a few particular areas.
This could change if American sentiment shifts significantly. The behavior of foreign buyers will also make a difference in how the housing market prospers.
People who are interested in buying a home should look at their specific region to determine how the market is performing. Although real estate appears strong in Riverside and Florida, the picture may be very different in your part of the country.