Seller's Market Emerging in Home Sales by Jim Woodard on Creators.com

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Seller's Market Emerging in Home Sales

We are steadily moving toward a seller's market in home sales. Existing-home sales edged up again in January. The rallying stock market is breaking records. All key indicators are pointing to a strong seller's market.

Home sales are rising in every region but the West, which is the region most constrained by limited inventory, according to the National Association of Realtors.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.4 percent to a seasonally adjusted annual rate of 4.92 million in January. That's 9.1 percent above the 4.51 million-unit pace in January 2012.

Lawrence Yun, NAR chief economist, said tight inventory is a major factor in the market. "Buyer traffic is continuing to pick up, while seller traffic is holding steady," he said.

"In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We've transitioned into a seller's market in much of the country."

Total housing inventory at the end of January fell 4.9 percent to 1.74 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace, down from 4.5 months in December, and is the lowest housing supply since April 2005 when it was also 4.2 months.

Q: How common are sinkholes, like the one that recently killed a man in Florida?

A: Sinkholes are more common than most homeowners realize. And the hazard is one that insurance companies generally refuse to insure, according to real estate research firm CoreLogic.

Even more shocking is that the firm analyzed hazards in the immediate area surrounding the impacted Florida home and discovered 16 verified sinkholes within a mile of the residence. The state of Florida has 15,000 verified sinkholes altogether, CoreLogic noted.

"It's important to note that not all sinkholes are prone to a sudden collapse, and they all obviously represent various levels of risk to people in the area," CoreLogic wrote in an advisory. "It's also interesting to know, however, that general homeowners insurance often does not cover sinkhole losses."

Q: Do previous homeowners who "walked away" from their homes now tend to be permanent renters?

A: No, most of those walk-aways (strategic defaulters) want to return to owning a home, it was noted in a recent survey.

The American Dream of homeownership has been resurrected among strategic defaulters, a foreclosure agency stated in a recent report.

After surveying previous clients, YouWalkAway.com found nearly 80 percent expressed a desire to purchase a new home again within the next 12 months.

A spokesman for the site explained it's common for previous customers to desire homeownership since interest rates are low and home buying lessons have been learned.

Q: How high would home prices have to rise to make them unaffordable?

A: Home prices could rise 35 percent without stretching affordability, according to Raj Dosaj, a vice president of LPS Applied Analytics.

Dosaj made that assertion while speaking at "Outlook: Is the Housing Recovery for Real?," a webinar session. Dosaj was joined by Christopher Whalen, executive president and managing director for Carrington Investment Co.

Whalen was quick to say the housing recovery is real.

"I think given the magnitude of the drop that we saw, you almost had to have a rebound and that's indeed what is happening," Whalen said.

Q: How is commercial real estate faring in today's market?

A: Major commercial real estate sectors continue to improve with gradual economic improvement and job creation driving absorption of space, according to the National Association of Realtors.

Lawrence Yun, NAR chief economist, said rental housing demand has been exceptionally strong. "Rent increases have been higher in multifamily housing where supply is not matching strong demand, thereby allowing landlords to raise rents at faster rates," he said.

Q: Is it true that most home sales during the past year were foreclosed properties?

A: Foreclosed homes and short sales accounted for 43 percent if all home sales last year, according to a report from RealtyTrac.

The firm's Foreclosure & Short Sales Report shows a total of 947,995 properties in some stage of foreclosure or bank-owned (REO) were sold during the year, a decrease of 6 percent from 2011 and down 11 percent from 2010.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.