Tuesday, April 16, 2013
Is Recovery on the Horizon? By Arianna Sandoval
During the bubble burst of 2007 the market became flooded with homes for sale; there were too many homes and not enough buyers. According to the Fresno multiple listing service “it would take more than a year and a half to sell everything then on the market” (Lee, 2012). But this was all just an assumption, the market is very unpredictable and the path of the market was unknown at that point. In less than a year the supply of homes available for sale has reduced dramatically not only in Fresno but throughout California. So being that there are more houses being sold, does that mean that the market is on the road to recovery?
Well let’s look at some interesting points before we consider a market recovery. With the inventory running so low more buyers are willing to pay more for a house they want. This in return has been raising the prices of homes. Although the prices have increased they are not at the level that they were back in 2006. These increases in home prices have slowly been rising since last year when the supply started to decline, an example of the median home price increase is from $158,950 in February to $160,510 last month this shows how slowly but surely the average price of a home is starting to increase (Lee, 2013). Although home prices are increasing it does not stop buyers from jumping at these offers. The prices in Fresno are still considered low compared to other cities in California, and with a low interest rate it is a perfect time to buy a home.
This increase in prices is not just a happening here in Fresno but throughout the Central Valley and California. Low inventories seem to be correlated to this increase in home prices but another interesting observation that Gary Painter [director of research at the Lusk Center for Real Estate at the University of Southern California] noted was the strengthening job market in San Francisco and the Silicon (Lee, 2012). If there are jobs available, people are going to move there and they need a place to live. All these factors are working together to decrease the homes available for sale and increase the sale price of the homes that are left in the market. The median price paid for a home in the Bay Area went from $325,000 in February a year ago up 24.6% to $415,000 in January (DQ, 2013).
With such great interest rate and the consumer confidence increasing, many people are considering buying a home. But for those people that are in search of the perfect home it may not be as easy. Back in 2006 there were for sale signs in almost every other house, there was a lot to choose from. Now 7 years later buyers are outbidding each other hoping the seller will take their offer. With so many offers on the table, homes for sale don’t last on the market. Realtor Tom Avant ran a "market barometer" and found that “there were only 798 active listings of single family homes, condos and PUD's in the Fresno/Clovis area, of those 798, there are 112 short sales and 107 Bank Owned listings (2013). This low amount of homes in the market is what is driving the prices up.
With all factors present; the shortage of homes for sale, increase median home price and increase in job opportunities many might say that the economy is on its way to recover. But it’s a matter of opinion, although all of these are good signs in the economy it doesn’t mean that we are in the clear. The economy still has a long way to go before it can be at a level it once was. I’m not saying not to buy or sell homes on the contrary it is a great time to do so, but I believe we shouldn’t get overly excited just because one factor of the economy is starting to recover. There are still many things that need to be done so that the economy is strong once again.
Avent, Tom. "Home Inventory Getting Tighter in Fresno." Fresno Real Estate Market Talk. BlogSpot, 15Jan. 2013. Web. 16 Apr. 2013.
DQ Custom Reports. "Bay Area Home Sales Ease Amid Tight Supply; Median Price Up Again from 2012." DQ Custom Reports Bay Area ReleaseD. N.p., 14 Mar. 2013. Web. 16 Apr. 2013.
Lee, BoNhia. "Fresno Bee Newsroom Blog." Real Estate: Fresno Median Home Prices Increased in March.TheFresnoBee, 15 Apr. 2013. Web. 16 Apr. 2013.
Lee, BoNhia. "More Buyers, but Fewer Houses for Sale in Valley." Trend Reversal in Fresno Area Real Estate Market. TheFresnoBee, 25 Mar. 2012. Web. 11 Apr. 2013.