What Makes Today's Market a Seller's Market? And What Expectations to Have...

Yes, it's true, we are back to being in a Seller's Market... but sellers, don't get overzealous.

Let's take a quick look at a couple of the main components for either a buyer's or sellers market.

Based on that knowledge, currently the demand is 21% higher than last year.  In fact over the past six weeks, the housing market has accelerated dramatically compared to last year.  From the end of January to today, demand has increased by 37% compared to 14% last year.  BUT, sellers need to understand that the current hot market is much different than the 2012 to 2013 smoking hot market.

In 2013 there were less than 3,200 homes on the market and demand was a little bit stronger than today.  And with the knowledge of the graph above, we know that when there is very little supply (fewer sellers looking to sell) and strong demand (a lot of buyers wishing to buy), prices take off.  The commodity, housing, is in short supply and buyer trip over themselves to purchase.

And so yes, today we are in a seller's market, BUT there are 76% more homes on the market than compared to 2013.  (So not as strong of a sellers market than in 2013)  Even with stronger demand, more supply means that homes will not appreciate as rapidly as they did a couple years back.

What will we see in the future:

The share of young adults living with their parents is projected to decline, according to a client note from Capital Economics.  Household growth has been abnormally low at about a half a million since 2008.  But growth is estimated to have risen to 1.7 million in 2014, according to the Census Bureau's latest Homeownership and Vacancy Survey.  In 2013, 31 percent of 18-34 year olds still lived with their parents.  Prior to the housing crisis, however, that percentage stood at 27 percent.  If the number of 18-34 year olds who live with their parents returns to pre-recession levels over the next fve yearss that could mean an extra 400,000 young adults leaving home each year.

"The U.S. economy is noww growing strongly, with real incomes rising rapidly and morgage credit conditions loosening," says Stansfield.  "That means more young adults will have the means to strike out on their own."

Now, let's just hope the interest rates stay low ;)