The residential real estate market made a strong post-recession comeback, even thriving in certain areas of the U.S., especially the heartland. However, the market is experiencing a setback for the first time in three months following a startling November report.
According to figures from the Commerce Department in Washington, in the first drop since August housing rates fell 1.6% to a 1.03 million annualized rate, a decrease from October’s 1.05 million pace which was stronger than anticipated. The culprit behind the decrease was a plunge in the South while other areas experienced gains.
Building permits also dropped last month, which means a surge in construction is unlikely in the immediate future. In fact, the construction rate of single-family houses fell to a 677,000 rate, while construction of multifamily homes, such as apartment buildings, jumped 6.7% to a 351,000 rate.
There is, however, a silver lining. The recent upheaval in the financial markets has resulted in lower interest rates, which combined with a strong job market, may allow more Americans to become homeowners within the next year.
“All the conditions for stronger residential investment are in place for 2015,” said Ryan Sweet, a senior economist at Moody’s Analytics. “An improving job market is going to do wonders for the housing market.”
As home prices decrease and lending standards become a bit more lax, homeownership may become a reality for more Americans. Beginning on Dec. 13, Fannie Mae began accepting lower down payments for first-time home-buyers and allowed refinancing borrowers to reduce equity to only 3% in order to cover closing costs.
Some real estate market experts and economists link the colder than normal temperatures to falling housing rates. According to the National Climatic Data Center, last month was the most coldest November in 14 years.
While winter has often been thought of as a slow period for real estate, real estate website Redfin believes it may be a prime time to put a house up for sale. Redfin reviewed data including home listing, sale price, and the amount of time the home was on the market, from 2010 to October of this year from areas across the country. The study revealed homeowners have a better chance of selling their home for more than their asking price if listed in December through March.
If the goal is to sell a home fairly quickly, February “is historically the best month to list, with an average of 66% of homes listed then selling within 90 days,” according to Redfin. Researchers found that in all of the 19 major markets, including cold-weather metropolitan areas such as Boston and Chicago, “home sellers were better off listing their homes in the winter than during any other season.”
While landscaping may not be on a homeowner’s to-do list during the winter months, according to Money Magazine, landscaping can bring a recovery value of 100 – 200% at selling time.