Eva & Temara’s 2011 Market Summary
What happened in 2011? There were many twists and turns that impacted our real estate market and made it yet again another unique year in the history of real estate!
We started the year with an inventory of homes available for sale of over 11 months supply. As we moved through the year and the mixed news of our economy bounced along, so did the real estate market. However, the poor economy in Europe pushed down and kept down our mortgage interest rates. This created an incentive for buyers to take advantage of the low prices and the record low interest rates. With reluctant sellers holding their homes off the market, the buyers worked their way through the inventory and we ended the year with just over 5 months of inventory. Sales increased 4% over 2010 while new listings were down over 25%; thus the low inventory at the end of the year. Multiple offers were not uncommon even early in the year as buyers decided they had postponed their home purchase long enough. With all indicators that it was an excellent combination of prices and interest rates – first time buyers and investors alike moved forward.
Activity is actually strong, and has really just returned to “normal” – it is the downturn from the artificial market of 2004-2007 that we must realize was the “abnormal”. Regretfully, this activity did not reverse the decline in prices. We saw increased bank owned properties and short sales. These homes severely impact the resale value of homes not in distress. While appraisers note that a comparison sale was a distressed sale, they are, none the less, sales that are indicators of the market value and push values down. We did see a bit of an increase in new construction in the more affordable home prices of less than $300,000 as those builders took advantage of the low interest rates and subdivisions that were waiting to be finished from the 2008 market as well as in fill building in the close in neighborhoods. The decline for 2011 metro wide average was approximately 7%; this number can swing both ways by as much as 3-4% depending on the neighborhood.
At this point, the graph below clearly illustrates our prices are equivalent to 2004 prices; again, with some variables depending on the neighborhood. On average, the close in metro held its value as it continues to be popular and convenient. This graph is for the entire metro area. It reflects the correction that we have seen in the market and the return to early 2000+ prices. We have more detailed maps for specific metro areas. We would be happy to send you one if you would like to see more specific information regarding your area.
An encouraging sign of recovery is from the consumers themselves. The Consumer Sentiment Index below shows “positive” thinking beginning in late summer 2011.
Temara and I continue to be “bullish” on real estate – right now, the combination of low prices and even lower record setting interest rates make this an amazing market to buy your first home, your “dream” home, your retirement home or your rental investment property. You cannot lose! With reduced inventory, selling your home right now can be part of your strategy for making that move that you may have been postponing – because the advantages of buying right now out will prove itself over time. The proof will be in the appreciation that will come in the future, as well as higher interest rates which could make a move later harder to do.
Call us if you want to talk specifics about your home or an investment possibility. We are always happy to talk about one of our favorite subjects. And, of course, we always appreciate you giving our name to a friend, family or co-worker (strangers sometimes work, too) to help them with their purchase or sale of real estate.
We wish you much joy and success in 2012. Eva and Temara
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