The housing market of the United States currently stands at a crossroads. 2013 was the year when the real estate industry bounced back after years of slump since the worst housing market crash in the history of US back in 2007. This led to many real estate analysts to predict that 2014 would be the ‘year of opportunities’. This was understandable since many homeowners returned back to positive equity and the market closed strongly during the last quarter of 2013. But has 2014 lived up to its high expectations? For now no, home sales were on a decline throughout the nation. This is because fewer homes were listed in January and February. We can however blame the weather for that, as the harsh conditions did not help anyone’s cause. But the fact that the real estate industry throughout the nation continues to perform well each year speaks otherwise.
January Was a Good Month in Some Markets, But Sluggish in Others
The year got off to a rather slow start for some states, while in others the freezing temperatures didn’t have much of an affect. In fact, there was an increase in median home prices and inventory year-over-year, though the figures were down when compared to how strongly the market closed in 2013. According to the National Association of Realtors, the national median home price is said to rise by 5 to 6 percent throughout 2014. Markets in Nevada, Detroit, and California top the list with the largest year over year increase in median home prices, increasing by a staggering 20 percent or more. However, markets n Detroit, Chicago, and Boston saw a 10 percent decline in month over month inventory. The number of listings in January 2014 across the United States were 1,672,799, increasing by 3.1 percent compared to January 2013, but decreasing by 3.3 percent in comparison to last month. The median age of inventory was 115 days, which didn’t see any year over year age, but did experience a 2.7 percent increase from last month. As for the median list price, it increased by 8.3 percent from January 2013 to $195,000, which is also a slight increase of 0.1 percent from last month.
The National View and the Local Highlights
Let’s talk about the national level first. To start with, the 83 markets out of the 143 showed year over year increase in inventory. Compare this figure to last year, only a mere 8 markets out of the 146 showed year-over-year increase. This is likely to continue throughout the year, as increasing inventory will give buyers many options in 2014.
The median home price increased overall in both year over year and month over month basis. January this year saw 44 markets experience 10 percent or more year-over-year increase in median home prices. Compared to January 2013, only 24 markets across the nation showed double digit increase. Hence, the median price increase is becoming more widespread and a national trend, leading to the 2014 housing market being called a seller’s market.
The median age of inventory stabilized in January 2014, remaining the same at 115 days on year over year basis. However, there were only 78 markets listed in January 2014, compared to 144 markets in January 2013. This has been a significant decline in year over year markets in terms of inventory. On the other hand, 56 of the 78 markets in January 2014 showed a strong year over year increase in inventory, in contrast to only nine markets in the same month of 2013. This figure speaks more of the harsh weather conditions this year, but again it didn’t affect the major markets.
As for the local markets, Nevada, Detroit and California look to dominate the median home price increase. As we are in the spring months, markets in Boulder, Chicago, Corpus Christi in Texas, and Denver look for resurgence as depressed inventory will accompany gain in median home prices on year over year basis. The low inventories in the mentioned markets could cause a demand driven increase in housing prices, similarly to how the sand states like California did in 2013.
The weather was to blame in Boston, Chicago, DC, Denver, Detroit, New York, and Philadelphia, as all these states experienced a monthly decline in inventory. However, the weather is looking to get better and these markets can experience a significant inventory recovery. Regardless of what has to come and how the market will close, 2014 is proving to be a stable year for the real estate industry.