Home Sellers Return To Market As Buyers Get Relief
Suzanne Baker and her siblings bought a foreclosed home in Atlanta two years ago, added a fourth bathroom, then waited for values to rebound before considering a sale. Now, she says, they're ready to cash in.
The family last month listed the four-bedroom house in the affluent Buckhead neighborhood for $710,000. It was purchased as an investment for about $375,000 in late 2011, before bulk buyers snapped up many of the area's distressed homes, helping to drive up prices in Atlanta by more than 25 percent.
"The market is back up," Baker said. "We think we can make a good amount of profit so we're going to try."
For two years, a shortage of sellers like the Bakers has propped up prices across the U.S. as shoppers jostled for a dwindling supply of houses. Now, as the market's busiest season approaches, escalating values are spurring more listings as homeowners regain equity lost in the worst crash since the 1930s. While new-home construction at a third of its 2006 peak will keep inventory tight, the supply increase is poised to damp price gains while higher mortgage rates cut into demand.
For would-be buyers, more choice would mean relief from the bidding wars of last year, when the supply was at a 12-year low leading into the key spring season. The period traditionally starts in mid-February, with deals picking up in the following months as weather in much of the country starts to warm.
Prices "won't be rising as much as they were rising last spring." said Jed Kolko, chief economist of San Francisco-based Trulia, operator of an online property-listing service. "It will be a less frantic market with more inventory and fewer investors."
The number of available homes climbed on a year-over-year basis in each of the last four months of 2013 after 30 straight declines, according to the National Association of Realtors. The increase in December was 1.6 percent.
Inventory rose the most in some of the tightest areas, from Arizona and California to Georgia and Florida, where leaps in prices erased negative equity and encouraged homeowners to lock in profits, according to a separate report from Realtor.com, the property-listings website for the Realtors association.
In Sacramento, California, where asking prices climbed 11 percent last year, listings jumped 58 percent in December, according to the website. The supply rose 35 percent in the Minneapolis area; 31 percent in Orlando; 27 percent in Atlanta; 24 percent in Dayton, Ohio; 23 percent in Oakland, Calif.; and 21 percent in Phoenix.
"Rising inventory is the primary reason that we expect the pace of price gains to drop back," Paul Diggle, property economist for Capital Economics in London, said in a telephone interview.