It seems the housing industry has taken a turn in the last year. I’ve mentioned the changes in this post about closing costs and this post about listing shortage in Orlando. I have urged buyers sitting on the sidelines to take advantage of the interest rates and home prices in Orlando before it was too late. Well the bottom of the market is in the rear view mirror now.
After years of excessive inventory and plummeting values we are now suddenly in a housing shortage in Orlando. We no longer have enough housing supply to meet the needs of the buyers in the market.
That sounds like a good thing, right? According to Lawrence Yun, the chief economist for the National Association of Realtors, this kind of sudden shortage could lead to housing values rising too quickly which could cause the affordability to decline.
The great thing about the most recent years is that housing affordability has been through the roof. With interest rates at historic lows and housing prices low, many buyers were able to enter the market who would not have become homeowners just 6 or 7 years ago. Now it is very difficult to enter the market due to heavy competition from investors and homebuyers with better financing options.
The shifting dynamics does offer opportunity for some people though…home sellers. Those folks who have wanted to sell for the last few years but were underwater or nearly underwater. These homeowners may now have just the right amount of equity to sell and move on with their lives.
Will this demand and lack of supply be the new trend in 2013? Or do you think this is just a mini anomaly in a slowly recovering market?