Where is the 2014 Real Estate Market headed? No one has a crystal ball but if history has taught us anything is that the past will provide us with valuable information towards the future. In Phoenix, AZ this past week at Keller Williams Family Reunion 1,000’s of the top agents, administrators and leaders gathered to listen to Keller Williams Co Founder and Chairman of the Board Gary Keller, and Vice President of Publishing & Executive Editor Jay Papasan speak about the upcoming year in real estate. Packed full with 3+ hours full of information and research to help us guide our clients towards making the right decision.
A couple slides that jumped out to us where Home Appreciation:
Based on the above chart, a bottom is clearly indicated in 2009, where home values dropped a staggering 12.5%. Over the course of 2007-2011 we averaged a 4.6% depreciation, which does not feel like the American Dream. However, in 2012 and 2013 we see substantial growth and gain. In the industry, we all felt it – multiple offers, traditional sellers entering the market place and low inventory levels. It is not clear if we can sustain equity gains of 11.5%, but the recovery of the housing market is happening.
What created the big equity gains?
The above graph represents months supply of inventory, meaning that if no new homes entered the market it would take “X” number of months to sell the homes already listed. At the very height of depreciation, inventory levels were at their highest (2008, 2009, 2010). Buyers could be very selective in what they wanted to purchase because there was so many homes available to choose from. 6 Months of inventory is considered a balanced market, and as you can see in 2013, we had 4.9 months of inventory which tipped towards a sellers market – explaining the exponential appreciation of 11.5%.
Slowly but surely with incremental equity gains, the number of homes that are underwater goes down. How does this play a role in my market? With more homes moving into the green, there are more sellers that can enter the market (inventory increase) and move up purchase (new buyers).
Hopefully this information is helpful and can paint of a positive picture with the real estate market and we are headed in the right direction.