The housing market finished 2011 with strength, and is carrying measurable momentum into 2012.
According to data from the National Association of REALTORS®, on a seasonally-adjusted, annualized basis, December’s Existing Home Sales climbed by 120,00 units overall from the month prior on its way to an 11-month high.
An “existing home” is a home that’s been previously occupied; that cannot be considered new construction.
After 4.61 million existing homes were sold in December, there are now just 2.38 million homes for sale nationwide. The last time the national home supply was this sparse was March 2005.
At today’s sales pace, the complete, national home inventory would be exhausted in 6.2 months — the fastest pace since before the recession. A 6.0-month supply is believed to represent a market in balance.
The December Existing Home Sales report contained noteworthy foreclosure and short sale statistics, too :
- Foreclosures sold at an average discount of 22% to market value
- Short sales sold at an average discount of 13% to market value
- Together, foreclosures and short sales accounted for 32% of all home sales
Clearly, “distressed homes” remain a large part of the U.S. housing market.
Furthermore, in its report, the real estate trade group also noted that one-third of homes under contract to sell nationwide succumbed to contract failure last month. That’s up from 9% one year ago.
Contract failure occurs for a multitude of reasons, most notably homes appraising for less than the purchase price; the buyer’s failure to achieve a mortgage approval; and, insurmountable home inspection issues. December’s high failure rate underscores the importance of getting pre-approved as a buyer, and of buying homes in “good condition”.
For today’s home buyer in Chicago , December’s Existing Home Sales figures may be construed as a “buy signal”. Home supplies are dropping and buyer demand is rising. This is the basic recipe for higher home prices ahead.
If your 2012 plans call for buying a home, consider that home values throughout IL are expected to rise as the year progresses. The best values of the year may be the ones secured this winter.