By Jesse McCarl
The fourth quarter of 2014 saw a significant jump in buyers over sellers. Leading into the fall, the buyer/seller ratio was about even, but seller activity dropped to end the year. On the surface this looks like it would be a good thing for sellers, but tight inventory appears to have lead buyers to the decision to just keep house hunting into 2015. Both buyer and seller activity stalled a bit in the last quarter, but nothing alarming given the time of the year. Below is the complete 2014 4th Quarter Market Report!
According to the most recent Current Market Conditions national grass roots survey conducted by HouseHunt.com, home prices continue to rise in most areas of the country. 89% of communities surveyed saw price appreciation year over year. This is exactly the same as the report from last quarter, but less than the 4th quarter in 2013 which saw 91% of agents reporting price appreciation. 8% of communities say home prices have actually gone down since last year, which is a slight increase from last year’s 6%.
Most of those markets saw over 10% price appreciation since last year; 36% of markets saw price appreciation in that window. 26% of markets saw 0-5% appreciation and 27% saw price increases in the 5-10% window. 3% of communities remain unchanged since last year and only 8% have actually decreased in value.
In terms of home price, HouseHunt agents saw greater appreciation in 2014 than projected by the National Association of Realtors.
The end of the calendar year saw more sellers settling for less than 95% of their asking price. This is surprising because there are so many more buyers on the market than sellers. However, this trend is common for the winter months, a traditionally slow time for the housing market. Those who have their homes on the market are usually trying to move under a deadline and are often willing to wiggle on the price more than in the flexible summer months.
- 89% of markets saw price appreciation year-over-year; consistent with last quarter, down slightly from 91% last year.
- 40% of markets indicated that average time for a home on the market has increased from last year, compared to 36% last quarter and 20% last year.
- 44% of markets report that the time a house sits on the market is decreasing, while 16% report that time on the market is unchanged.
- 15% of agents surveyed saw more new foreclosure and short sale listings. This is 2% more than last quarter, but down from 20% this time last year.
- 56% of listing agents said their listings sat on the market for 0-60 days. This is down from 63% last quarter and 57% last year.
The third quarter saw steady growth in new construction and housing inventory. That positive growth has continued; 44% of markets report a good supply of houses. This is up 39% from the previous quarter and 32% from last year. This number may decrease when the large number of buyers on the market actually begins closing on properties, but it is still lower than the historic average.
Buyer v. Seller Activity
Last quarter, the buyer to seller ratio was about even. In the final quarter of 2014, we saw buyer presence drastically pick up, even though buyer activity actually dropped. 50% of agents surveyed reported more buyers on the market than sellers. This is an 11% jump over last quarter, but is in sync with what usually happens in the last quarter of the year. 2013 ended with 51% communities reporting more buyers than sellers.
Only 24% of communities surveyed reported even buyer to seller ratio.
So what did those buyers look like? First-time buyer activity picked up to make up 24% of agent’s buyer clientele. This far surpassed the FTHB rate from the previous quarter (16%), and even the rate from the same time last year (22%).
Considering a nationwide concern that first-time buyers were largely disappearing, this uptick is welcome news. The trend is due in part to historic low interest rates. The first-time home buyer rate is still lower than the historic average of 40%. The percentage of repeat buyers and investors dropped to 76%.
What’s concerning is not the buyer presence in the market right now so much as the buyer activity. There is a general slow-down in market activity in general, which is normal for the end of the calendar year. The slow-down is more noticeable in buyers though, which indicates that even though a lot of people are looking for homes right now, few are actually pulling the trigger and purchasing.
This lack of buyer activity is most likely attributed to buyers in flexible living situations. They are not pressured to close on a home under a certain deadline. Instead, they are likely living with parents, in month-by-month rentals, or are waiting to sell their own property. This is most evidenced by the increase in first-time buyers, as well as the decrease in seller activity.
- Buyer activity is increasing in 48% of the markets this quarter compared to 39% last quarter and 56% last year.
- Seller activity increased in 37% of the markets surveyed, compared to 59% last quarter and 44% this time last year. This indicates sellers had a particularly weak season.
- 33% of markets reported a decrease in buyer activity, while 19% reported no change.
- 37% of markets reported a decrease in seller activity, while 26% reported no change.
HouseHunt’s Quarterly Comparison Chart For the U.S. | 4th Quarter 2014 Results in Red
|Average Days On Market|
|Sold in 60 Days Plus||61%||60%||54%||35%||35%||43%||40%||37%||37%||44%|
|Annual Price Appreciation|
|Up 10% Plus||6%||18%||29%||43%||54%||31%||42%||37%||25%||36%|
|Repeat / Move UP / Investors||67%||73%||74%||81%||85%||78%||79%||77%||84%||76%|
|Ask vs. Sale Price|
|Less Than 95%||38%||37%||31%||30%||23%||30%||23%||9%||22%||28%|
|More Than 95%||62%||63%||69%||70%||77%||70%||77%||91%||78%||72%|
Consumer confidence has continued to steadily improve in the housing market. This is most evidenced by the sudden first-time buyer activity and the patience of buyers to wait for the right home to become available. This buyer confidence is due to the lowest unemployment rate in many years, as well as historic low interest rates.
The boost in the economy has given buyers more patience, but has also made sellers more stubborn. Home prices have continued to increase, even if slightly more people are having to settle for less than asking. When the overall economy is strong, there is less reason to buy or sell with any compromises. We can expect this stand-still to be short lived as buyer and seller activity will increase in the first quarter of 2015 with the approach of spring.
Home prices grew in 2014 and are expected to continue at a similar rate throughout 2015. NAR economist Lawrence Yun expects a 5% increase in home prices and 7% increase in home sales, saying, “There is a pent up market for home sales” after the stall at the end of 2014. Overall, 2014 was a strong year and gives excited expectations for further growth in the next calendar year.
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