Prices are Rising. According to the S&P Case/Schiller Index prices were up 4.3% nationally over the last year. Although the Queens/Long Island region has seen less growth because of distressed property sales ie. short sales and foreclosures and the impact of Hurricane Sandy (November 2012 contracted sales declined 14.6% over last year at this time per MLSLI), the region has had 11 consecutive months of increased contracted sales leading up to November. This pace will resume in the coming months as demand returns.
Interest Rates Will Fall Further. According to a 12/18/2012 Inman News report mortgage rates are expected to fall even further in the next year. Current rates at 3.7% may decline to 3.4% in 2013 as a result of the Federal Reserve’s continued efforts to keep rates low.
Inventory of Homes For Sale Are At Very Low Levels. Inventories of unsold homes on the market nationwide fell to 4.8 months supply in November down from 5.3 months supply in October. Inventory in Queens/Long Island was down 19.6% over last year at this time. Six months of inventory represent a balanced market with equal numbers of buyers and sellers. Below six months of inventory we see a seller’s market as multiple bidding occurs and prices ultimately rise.
Uncertainty Still Affects the Credit Markets. As provisions in the 2010 Dodd-Frank legislation are debated and instituted features such as the Qualified Residential Mortgage (QRM) and the Qualified Mortgage (QM) will affect lending standards. Credit will flow more easily if the regulations are clarified in a reasonable way.