More New Construction
New-home sales are up 15.3% over the past year, hitting an annual rate of 377,000 in November, according to Census Bureau data. Buyers will welcome new homes with the supply of turn-key homes low.
Price increases are new homes faster than existing, with $246,200 as the median price of a new home in the U.S. for November. This is a 15% increase from the previous year. As supply of new homes increases the prices may go down.
Homes Are Slightly More Expensive
The economy appears to be improving slowly with low interest rates demand has increased slightly. A decreasing supply has raised prices a bit. According to the National Association of Realtors, November was the ninth consecutive month of home-price increases.
Clear Capital expects prices to rise just 2.1% nationally in 2013. While, eight out of the 50 major markets it studied should see prices fall a little in 2013. None are expected to drop more than 1.7% according to Clear Capital.
Inventory is Low
As mentioned a decreasing supply of homes may be the reason for the small increase in prices. The inventory of existing homes for sale at the end of November was down 3.8% from the previous month. This is the lowest supply since the fall of 2005. Listed inventory is down 22.5% from a year ago, when there was a 7.1 month supply.
The main reason is most homeowners realize they probably won’t be able to sell their homes at a price to recoup what they have put in. Also, banks are selling foreclosed properties to investors as rentals.
New Mortgage Rule Will Protect Buyers
The Consumer Financial Protection Bureau recently came out with a new rule. The Ability to Repay Rule will take effect in January 2014 protecting individuals from risky mortgages that caused many to lose their home in the past.
The rule will require borrowers employment status, assets, debt and income be verified by lenders. Other common sense thing such as debt to income ratio must also be shown that the borrow has ability to pay back the loan.
The Luxury Market Experiences Quick Decline in Sales
The sale of luxury homes worth more than $1 million rose 51% in November. The increase was brought on by the potential tax hikes that were to take place with the fiscal cliff deal in January.
The drop in supply with the big number of luxury buyers who swiped up homes before 2013 there should be a bit of a slowdown in high-end home sales for the first part of 2013. For those looking to sell a luxury home the low supply also means less competition.
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