Gradual and uneven progress in the housing market continues without government support. The market has shown remarkable improvement from the initial drop after the expiration of the home buyer tax credit this past July. Although higher-than-normal distressed and all-cash sales continue to skew the overall picture of home prices downward, inventory remains at pretax credit expiration levels. As economists anticipate rates at or above 6% by the end of 2012, buying activity is expected to continue its upward momentum.
Increasing signs of inflation have been a recent item of concern. Driven by unrest in the Middle East, the retail price of gas has risen by 25% since the year began and 89% from this time two years ago. In his first ever press conference, Federal Reserve Chairman Ben Bernanke noted the Fed believes these price increases are transitory and will not have a major impact on the U.S. economy. However, according to NAR’s chief economist, for each $10 per barrel rise in oil prices, $80 billion is removed from the economy.
Bernanke stated that the Fed will keep a close eye on the impact of oil prices on the economy as it considers policy changes. Although inflation is up for the first quarter, price gains excluding food and fuel slowed in March, helping consumers to feel less constricted.
As the economy improves, stimulus efforts by the government and the Federal Reserve Board will gradually wind down, which typically spurs rising interest rates to keep inflation in check. Meanwhile, buyers continue to benefit from historically favorable buying conditions and sellers are encouraged by increased market stability.
Home sales were up 3.7% in March compared to the previous month but were down 6.3% compared to the same time last year when the impact of the tax credit was nearing its peak. Gradual but uneven improvement is expected to continue. In fact, home sales have increased six of the past eight months. The general trend of improvement remains a positive signal, as home sales remain up 32% since the low in July and are down only 12% since the peak last April, which was induced by the tax credit deadline of a signed contract by the end of that month.
Inventory- Month's Supply
The supply of homes measured in months on the market, if sales continue at their current pace, remained stable compared to the previous month. This is the third-lowest level since June. Inventory levels remain 33% below its peak of 12.5 months in July and only slightly above where it was last year when the tax credit was in full-swing.
Source: National Association of Realtors
After rising above 5% for the first time in ten months in early February, rates have remained stable in the 4.8% range. They are still expected to follow an upward trend throughout the year. As overall economic recovery remains on track, rates will likely rise to keep inflation in check. Buyers wanting to capture the savings in monthly payments that a historically low interest rate affords are expected to move quickly to take advantage of excellent buying conditions.
Staging is an increasingly important component, not only in selling a home but also in attracting would-be buyers. Even with all of the commonly accepted advantages of staging, only about 1 in 3 sellers stage their home.
The Internet is one of the main sources of information buyers use during the home search process, and staging is key to showing the home at its best online.
Rooms that sellers stage most often:
The cost of staging is minimal compared to the benefits: more showings and ultimately a higher percentage of asking price.
A summary of Kauai real estate sales is shown in the charts below. The relatively low number of sales each month can cause the median sales price to fluctuate significantly. It is recommended that median sales price be viewed as what is selling and not an absolute measure of value of properties.
Additional Kauai sales information is available upon request.
Contact Richard Dolbeare for information about the Kauai real estate
market. Kauai market updates and local events are periodically posted
Kauai Real Estate blog.
About Richard Dolbeare
Richard Dolbeare is a full-time Hawaii Realtor® living and working on
the island of Kauai since 2004. He is an agent with Keller Williams
Realty with important referral benefits from his affiliation with the
2nd largest real estate franchise in the nation. Referrals from Keller
Williams agents across the nation are a key source of leads for both
buyers and sellers of Kauai real estate.
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