The housing market’s rise can be attributed to a variety of factors. While the demand for homes has been good all year, it wasn’t until June that we saw an increase in supply. This increase occurred as sellers became more confident about housing prices. The recent increase in mortgage rates and the speculation that interest rates will rise later this year have also contributed to the current market.
The rise in first time home buyers is a major factor that’s driving demand. Many of these first time home buyers are Millennials who’ve been halted by the challenging conditions of the market. According to a survey of site visitors by Realtor.com, 65% of older Millennials (ages 25-34) reported they intend to buy a home within three months. This is a 12% rise from six months ago.
Job growth and increased consumer confidence can be credited for the increase in the demand for homes. It’s estimated that over 3 million jobs have been created in the past 12 months, with more than 1 million being created for older Millennials, the typical age range for buying a first home.
The rise in demand has also allowed homes to sell more quickly. Realtor.com reported the median age of inventory nationwide in May was 66 days, which is eight days faster than last year. The hottest markets are seeing inventory sell 18 to 45 days quicker. Based on the number of views per listing on and the median age of inventory in each market in June, Realtor.com provides a list of the hottest housing market in the country:
While the housing market seems to be booming, home buyers should have their real estate agent calculate the “months of supply”, which is a measurement of the time it would take to exhaust a certain market if no more inventory were to enter that market. A value above six months is considered a buyer’s market, one to four months is a seller’s market, and above four and below six is neutral. Finding homes even before they hit the general market will also put home buyers at a competitive advantage.
However, a problem that still remains is some Americans have poor credit and are unable to attain a mortgage loan. In this case, they can purchase a seller-financed home, and the seller can create and sell a mortgage note to a note buyer to receive immediate payment.