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Low Inventories indicate a Trend

by John Riggins

 

Low Inventories Indicate a Trend

Low inventory is a relative term depending on how you're comparing it.  Would the comparison be to total number of homes on the market last year, homes in a certain price range or homes in a certain area?  In some situations, it's a combination of all of those things.

In any given market, inventories will fluctuate based on area and price range.  The National Association of REALTORS® considers a balanced market to be six months' supply of homes.  If it takes longer than six months to sell, it is thought to be a buyer's market and less than six months, a seller's market.  Most buyers and sellers probably feel inventory equilibrium is more like three month's supply of homes.

Inventory has a direct impact on price.  During the housing bubble, demand decreased, supply ballooned to four million houses and prices dropped dramatically.  Increased inventories due to foreclosures, bank' revised lending practices and builder's lack of new housing starts each contributed to the dramatically lower prices.

As the market has recovered, economic conditions have improved, banks have loosened their requirements, interest rates have remained low, foreclosures have slowed and gradually, the inventory has been reduced to approximately two million houses.  When demand is constant but inventory is reduced, price tends to increase because the same number of people are trying to buy a smaller than normal number of homes.

Based on the low mortgage rates that have been inching up each week in 2013 and an improving consumer confidence level, most markets are experiencing some increase in demand.  With inventory decreasing, buyers in the marketplace can see that prices are increasing.

Just as signs of spring can be seen to be just around the corner, it should be recognized what direction prices will be moving.  Hindsight is 20/20 but we can't purchase or sell in the past.  We need to make decisions today on what we think will happen in the future.

If you're curious to know what inventory conditions are for your specific market, send me an email with the price range and area and I'll send you a report.  John@JohnRiggins.com

Determining Value

by John Riggins

 

Determining Value

Knowing the current value of your home is important when you're considering a move, refinancing or getting a home equity loan. Prices are determined by recent sales and the supply and demand of current inventory.

The process of selecting comparable properties involves matching similar features like bedrooms, baths, square footage and updates. In addition to price, there are other factors that affect the value and ultimately, the sale of a home.

Location plays a significant role because by the unique combination of improvements and land. Beneficial considerations would be convenience to schools, shopping, transportation and proximity to freeways. Undesirable concerns could include being in the vicinity of busy streets, high-tension lines, commercial property and other things.

To receive a computerized estimate on the value of your home that includes prices of comparable homes that have sold recently and homes currently for sale, click here.

Value is not totally objective and does require a certain amount of subjective considerations. If you have questions after you receive your report by email, contact us and we'll be happy to talk to you about your concerns.

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Contact Information

Photo of John Riggins REALTOR RB11175 Real Estate
John Riggins REALTOR RB11175
John Riggins Real Estate
1003 Bishop Street, suite 2700
Honolulu HI 96813
808.523.7653
808.341.0737
Fax: 888.369.3210