The housing market's performance so far this year left a lot to be
desired, but Redfin (www.redfin.com)
expects the market in urban areas to regain its footing over the second
half of 2014. In the June 2014 Redfin
Housing Market Tracker, Redfin chief economist Nela Richardson
predicts a late summer rebound for four reasons:
1. Sales are catching up to 2013's highs.
With 114,240 home sales, June 2014 came close to the high bar set last
year, which was the strongest year for home sales since the recession.
In June, sales were down only 2.5 percent year over year. Sales in the
second quarter of 2014 are up 45 percent from the first three months of
2. Homebuyer demand is up.
Redfin data shows that the number of customers going on tours with
Redfin agents in June was up 27.1 percent from a year ago. Tour growth
in bucking seasonality trends, which tend to peak in May. This indicator
of buyer demand continues to strengthen as we head into the second half
of the year.
"In Atlanta, the market slowed in late spring and felt really quiet
around Memorial Day. But once summer officially started, the buyers came
back," said James Marks, Redfin real estate manager for the Southeast
region. "Last year, a lot of homebuyers who got frustrated by the low
inventory gave up on buying and re-signed their leases. Their leases are
about to expire and now they're back, taking a fresh look at the new,
but still limited, inventory."
3. Price growth is becoming more sustainable.
Even as the median sales price in June topped $300,000 in urban markets,
price growth reached a two-year low of 6.4 percent. Prices over the past
three years have been an expensive roller coaster for both buyers and
sellers, depreciating in 2011 and jumping by double digits by the end of
2012. Price growth through 2013 averaged 14 percent. In June, the median
sales price grew at half that rate, much more in line with a sustainable
rate that won't have the market panting to keep up.
4. Home inventory is returning, albeit slowly.
In June, for a second month in a row, the number of homes for sale was
above 500,000 - up 8 percent from this time last year. In 22 of 30
markets, there were more homes or sale than last year. The biggest
year-over-year increases in homes for sale were in Riverside, California
(28.1%), Phoenix (25.2%) and Orange County, California (24.6%).
So while the main long-term drivers of housing activity remain stalled -
namely below-average growth in median household income, labor force
participation, bank lending and household formation - metro markets
continue to get a boost from pent-up demand caused by the low inventory
that plagued housing for the past two years.
The second half will not be without its wobbles. The housing market will
have to jockey between poor economic indicators and pent-up buyer
demand. But the housing market can maneuver around the juggernaut of
subpar long-term economic fundamentals, based on the very real
difference between this year and any other year post-crisis: Housing is
now edging back to normal.
To read the full report, complete with data, charts and more commentary,
Connect with Redfin
the Redfin mobile app
is a customer-first real estate brokerage that represents people buying
homes. Founded and run by technologists, Redfin has a team of
experienced, full-service real
estate agents who are advocates, not salespeople, earning
customer-satisfaction bonuses, not commissions. Redfin.com features all
the broker-listed homes for sale, as well as for-sale-by-owner
properties that don't pay brokers a commission. Redfin also offers online
tools that make the entire process of buying or selling a home
easier and more fun. The company serves major markets across the U.S.
and has closed more than $13 billion in home sales. In 2012, Redfin was
named one of The DIGITAL 100: World's Most Valuable Private Tech
Companies by Business Insider.
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