Friday, March 7, 2014
By SCOTT MAYEROWITZ The Associated Press
(Continued from page 1)
Christian Bell and his wife, Beth Heinen Bell, view a home for sale in Grand Rapids, Mich. The couple is frustrated by the small number of houses on the market. They “wanted a day to think about” one house they liked, only to have it snapped up by someone else.
The Associated Press
The market in Grand Rapids is more subdued but still driven by a supply shortage.
The Bells recently toured a 142-year-old home. Calling it a "fixer-up project" would be generous. Floors drooped. Doorways tilted. The master bathroom had a comically low ceiling. The only thing working in the living room was a mouse trap.
It was the only affordable house for sale in the small historic Heritage Hill neighborhood the Bells love.
Nationally, there were just 1.93 million homes on the market in March, down 16.8 percent from the prior year, according to the National Association of Realtors. In a healthy market, there's roughly a six-month supply. This March, that number had fallen to 4.7 months -- a situation stacked against buyers.
As more would-be buyers bid on fewer properties, prices are being forced up at a rate that might be overstating the market's health. Prices in the top 20 cities have risen 9.3 percent in the past year, according to the S&P/Case-Shiller home price index. That's the fastest year-over-year increase since May 2006.
Homes now sit on the market for just 62 days, down from a median of 91 days last year. Would-be buyers who like a home are being urged to act fast.
The tight supply is a key reason that Susan Wachter, a real estate and finance professor at the University of Pennsylvania's Wharton School, estimates a full recovery is still three to five years away. Even so, Wachter calls this "a breakout spring." The public now recognizes, she says, that the housing recovery will last.
The Bells have already lost out on one house they liked.
"We wanted a day to think about it," says Beth Heinen Bell, 32, a communications coordinator for a writing festival. "We left the house, and our agent got a call that there was an offer in."
Diane Griffin, CEO of Griffin Properties, which has been helping the Bells search for a home, says a major problem is that many potential sellers aren't being realistic about price. She often has to explain that their property isn't worth what it was during the boom.
"This is the most difficult conversation I have with people," she says. "I have it multiple times a day."
Some relief will eventually come from faster construction. Builders broke ground on homes in March at the highest annual rate since June 2008. But construction firms aren't yet ready to return to the even greater levels of building needed to fill the housing shortage. They're worried about rising costs for materials and labor. And many have had trouble finding skilled workers.
For now, that leaves would-be buyers with few options. Agents urge their clients to act fast, knowing how fierce the competition is. But often, it's not quick enough.
Grand Rapids real estate agent Michelle Gordon says that on Monday mornings, she typically gets a list from her clients of six or seven homes they want to tour that Saturday.
By the time the weekend comes around, Gordon says, "I'm lucky if I have two to show."