By Chad Taylor
As time keeps marching along, home values just keep climbing! Just last month, the S&P/Case-Shiller home price index was up 12.2 percent compared to a year ago. This index is a comparison of similar single-family home sales that have taken place year over year. This method is strongly touted as being presented in “real terms” due to the fact inflation is taken into consideration.
The 12.2 percent improvement represents the biggest year-over-year increase in home values since March 2006. In fact, national home prices have increased every month since June 2012. Even better, the percentage of increase has increased compared to the previous month since last June.
Ok, so I will lay off the stats for a minute, but, man, that is a strong message — and a message that both buyers and sellers need to hear. But I will get back to that in a moment.
According to the S&P/Case-Shiller home price index, current home values are still 24.4 percent below the peak of values in 2006. However, at the current improvement rate, we are catching up quickly. The difference between now and then is that the current values are still much more in line with the cost of living. That is what got us into trouble as a nation in 2006. Values were quickly outpacing the cost of living.
Although our market is still going strong, I am already seeing the intensity level subsiding. And, personally, I am happy about that.
Inventory is still really low, but appears to be holding steady in most areas of town. This could be due to the increase in interest rates over the last two months, or it could just be our normal seasonality taking effect. Or a little of both. Either way, the market appears to be taking a slight pause — a deep breath, if you will. My prediction is that we will pick up where we left off in the next two to three weeks (after school is back in session). This deep breath is causing more price adjustments and more sellers to think twice before they over-price their home in hopes that the current appreciation rates will justify their price. So, what should we take away from this column?
Here you go:
Buyer’s out there: As rates continue to climb, and values do the same, now is your time. I know that I sound like a broken record, but don’t try to time the market. All indications are that you will come out as the loser if you wait. Remember that an increase in your interest rate will have the biggest impact on your future mortgage.
Now, to my seller’s out there: The current trends seem to paint a picture that the longer you wait to list your home, the stronger the re-sale value will be. Not necessarily true. With Fall and Winter on the horizon, the number of active buyers will decrease as it always does. Seasonality is a fact of life. Less demand equals less leverage for the seller. If you want to be in the driver’s seat for your home sale, act now.
Next week: What do recent home buyers think about the market of today? Another great interview!
This weekly sponsored column is written by Chad Taylor of the Taylor-Made Team and Keller Williams Realty Key Partners, LLC. The Taylor-Made Team consistently performs in the top 3 percent of Realtors in the Heartland MLS. Please submit follow-up questions in the comments section or via email. You can find out more about the Taylor-Made Team on its website. And always feel free to call at 913-825-7540.