The latest housing numbers are out and the message is clear: Things are heating up in markets across the country once again, and the best news about this is the fact that it’s no longer just investors who are gobbling up properties. Now we’re seeing more demand and sales coming from primary residence buyers.
Sales of existing homes increased 3.4% to an annual rate of 4.62 million in April from March, and were up 10% from the same month a year ago, according to the latest numbers from the National Association of Realtors. The best part of this news is that home values also increased 10.1% to $177,400 in April. The increase in values may seem to hurt affordability, but in actuality it tends to spur more buyers who are on the fence to make a move while conditions are still great.
Buying conditions are still excellent for buyers. Average rates on the 30-year fixed-rate mortgage were 3.79%, according to Freddie Mac’s latest survey measuring the week ending May 17.
Not only are the numbers good – they’re showing strength in all the right places. A healthy market is one that sees sales and values increasing at a reasonable pace, and one that is not unevenly filled with distressed properties and investor buyers.
The share of sales that were foreclosed properties is slowly diminishing. Distressed homes, which include foreclosures and short sales that sell for deep discounts, accounted for 28% of April sales, with 17% being foreclosures and 11% being short sales. This was down from 29% in March and 37% in April a year ago. Foreclosures sold for an average discount of 21% below market value in April, according to NAR, while short sales sold at an average 14% below market value.
The share of buyers who were first-time purchasers increased to 35% in April, up from 33% in March, but down slightly from 36% in April last year. Meanwhile, investors purchased 20% of homes in April, down from 21% in March, and holding steady from 20% during the same month last year.
Depending on your market, you may be seeing a plethora of discount deals still out there, or multiple bid situations. NAR says this is because inventories are tight in some markets, notably the Washington, D.C., area, Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle. Expect stronger price increases in most of these areas in the coming months.
All of this shows that to talk about the condition of the housing market right now, you really need to first define which segment you’re talking about: first-time buyers, foreclosures, city, state, neighborhood, etc. The market is moving in a few different directions, depending on where you’re looking. Overall, things are definitely trending up, but be sure to understand which segment you’re trying to assess before drawing any big conclusions.