Prices Up, Inventory Down: Buying In A Seller’s Market
The winter weather hasn’t stopped the housing market in its push to recovery. What is normally a slow season for real estate, the kickoff to 2013 has proven to be anything but. Prices soared by 0.7 percent from December to January, with January’s prices up 9.7% from a year ago. This is the largest increase since April 2006, according to CoreLogic.
The home price index (HPI) projects another 9.7% yearly increase when the February report is released. “With these gains, the housing market is poised to enter the spring selling season on sound footing,” said Mark Fleming, chief economist for CoreLogic. The top 5 states to lead the annual home price gains were Arizona (+20.1%), Nevada (+17.4%), Idaho (+14.9%), California (+14.1%) and Hawaii (+14.0%).
Despite the rise in home prices, inventory fell 23% year-over-year across the nation in February. Inventory dropped more than 50 percent in several California metros. According to Trulia, nearly all of the metros with the biggest inventory declines also had year-over-year price increases. San Jose had an 18.5% increase in home prices in February.
Wealthy Americans Choose Quality Over Price
It’s no secret that wealthy consumers make buying decisions differently than the rest of America. Despite the low inventory/price increase melodrama that has largely unaffected the wealthiest Americans, the tide is still changing in how wealthy homebuyers are buying.
Gone are the times where price is the number one condition of a purchase decision. Wealthy consumers hold the quality of their home as the most important buying decision. Buyers are reinforcing the value of certain luxury amenities that ensures quality and privacy, also known as the “Worth Dynamic.”
Alain Pinel of Intero Real Estate dives into the statement “I Know I Paid More Than I Should Have, But It Was Worth It!” He lays out the terms of the “white paper,” which serves as a roadmap for high-end realtors looking to hook their high-end clients. The white paper focuses on the shift in priorities of wealthy consumers and suggests a trend that focuses on associating with communities where the most affluent are less likely to be judged and having to defend their success. This is a movement away from the days where the wealthy flaunted their success to their less fortunate neighbors.
Privacy is everything and the wealthy are willing to pay more to ensure they get it. Spring is coming and whether you are ready to pay the big bucks or not, it is important to take note of the sturdy selling season ahead.