With home prices back on the rise, it’s becoming abundantly clear that we’re in the midst of a seller’s market. The Wall Street Journal made the proclamation last week following an analysis of the the latest report from the National Association of Realtors.
Several factors have led to a continuous increase in home prices throughout the nation, not the least of which is a severe shortage supply. According to the N.A.R, the number of properties for sale fell by 4.9 percent in January on a month-by-month basis to 1.74 million. The total housing supply in the U.S. hasn’t reached such depths since December 2009. To give you a further idea on how supply has fallen, the Wall Street Journal points out there were 2.91 million homes on the market in January 2011.
As a result, this lack of supply—coupled with a growing number of buyers that includes a surge in investors—has helped to put home prices on a steady trajectory.
California has been among the states hit particularly hard by the supply shortage, the Wall Street Journal points out. Most experts believe the housing market could be growing even faster if there was an adequate supply. However, many homeowners in California remain underwater on their mortgages and are reluctant to sell until prices increase even further.
Many analysts are optimistic that nationwide home sales could reach 5.2 million units this year, which would represent a 12 percent increase from 2012. However, other concede that mark could prove elusive if supply doesn’t loosen and potential buyers are forced to hold on to their money.