“There’s something happening here – and what it is ain’t exactly clear” – lyrics from the Buffalo Springfield song For What It’s Worth. That was from way back in the 60’s. Who would have ever thought that the words would be appropriate for the 2014 real estate market, at least in my area (near Minneapolis) ???
I’ve gotta tell ya, this is the weirdest year I’ve ever seen for real estate. Last year was a good year for home sales. Notice I said good – not great. It was a heck of a lot better than years past, but nowhere near the days of multiple offers on every house that went on the market. Remember 1994? I do. Tried to buy a house myself. Every one had multiple offers, mostly all well over the asking price. I finally ended up buying one before it ever even went on the market. So no, last year was no 1994! So, back to what’s happening this year. It started off like gangbusters this spring! Certainly looked like it was going to be a year to beat the heck out of 2013. And yep, multiple offers were common. Then came June. The most memorable June ever for my area. We had over 11 inches of rain – came within .3 inches of breaking the all-time record. The lakes and rivers rose out of their banks, closing streets and flooding homes. So rather than the typical July slowdown in the market, we had our slowdown starting in June. I suppose people were too busy trying to get around and to save their homes. Can’t blame ’em for that. So, silly me, I thought maybe the market would pick up again in July. Nope. It declined even more than June. Time on the market went up. Showings were way down. Mortgage applications for both new purchases and refinances were down. Unlike the recent past, new listings were finally UP. We’ve had a severe inventory shortage, with way more buyers than sellers. So where have the buyers gone??? What’s really weird is that prices are up a little. About the only homes that are selling are those that are underpriced or those that are less than $200,000.
Could it be due to rising interest rates? Not likely. While it’s true that rates have increased very slightly, they’re still near the lowest they’ve ever been. And don’t forget, anything around 4.25 to 4.5 % is still one great deal. Remember 16% and up??? If anything, I’d think that rising rates might give folks a little incentive to buy something before they go up more. Could it be prices? Doubt it, they’re still low even if they are rising a bit. Flooding? Nope, that’s gone. Is it the economy? Got me. I don’t remember hearing any horrible economic news lately. Lots of news about mid-East unrest and fighting, but not horrible economic news. Political? I don’t think so. No major elections coming up anytime soon. So what’s keeping the buyers from buying???
I just don’t get it. The conditions are perfect, or close to it, for people to buy a home. Why aren’t they? Ideas are welcome.