Gradual and uneven progress in the housing market continues without government support.  The market has shown remarkable improvement from the initial drop after the expiration of the home buyer tax credit this past July.  Although higher-than-normal distressed and all-cash sales continue to skew the overall picture of home prices downward, inventory remains at pretax credit expiration levels.  As economists anticipate rates at or above 6% by the end of 2012, buying activity is expected to continue its upward momentum.

Increasing signs of inflation have been a recent item of concern.  Driven by unrest in the Middle East, the retail price of gas has risen by 25% since the year began and 89% from this time two years ago.  In his first-ever press conference, Federal Reserve Chairman Ben Bernanke noted the Fed believes these price increases are transitory and will not have a major impact on the U.S. economy.  However, according to NAR’s chief economist, for each $10 per barrel rise in oil prices, $80 billion is removed from the economy.

Bernanke stated that the Fed will keep a close eye on the impact of oil prices on the economy as it considers policy changes.  Although inflation is up for the first quarter, price gains excluding food and fuel slowed in March, helping consumers to feel less constricted.

As the economy improves, stimulus efforts by the government and the Federal Reserve Board will gradually wind down, which typically spurs rising interest rates to keep inflation in check.  Meanwhile, buyers continue to benefit from historically favorable buying conditions and sellers are encouraged by increased market stability.

Interest Rates

After rising above 5% for the first time in ten months in early February, rates have remained stable in the 4.8% range.  They are still expected to follow an upward trend throughout the year.  As the overall economic recovery remains on track, rates will likely rise to keep inflation in check.  Buyers wanting to capture the savings in monthly payments that a historically low-interest rate affords are expected to move quickly to take advantage of excellent buying conditions.

Home Sales

Home sales were up 3.7% in March compared to the previous month but were down 6.3% compared to the same time last year when the impact of the tax credit was nearing its peak.  Gradual but uneven improvement is expected to continue.  In fact, home sales have increased six of the past eight months.  The general trend of improvement remains a positive signal, as home sales remain up 32% since the low in July and are down only 12% since the peak last April, which was induced by the tax credit deadline of a signed contract by the end of that month.

Home Prices

Home prices rebounded 2.2% in March with median home prices rising to $159,600.  This is 5.9% below the year-ago level and keeps the median price close to 2002 levels.  Continuing February’s trend, two out of every five homes sold during March, or 40% of sales, were distressed properties, which typically sell at a 10%-20% discount.  The decline in home prices is less indicative of individual home values and more reflective of a large number of less expensive homes selling and bargains that are getting snapped up.  Investors represented 22% of sales, and all-cash buyers were at a record high of 35% of sales in March.  Prices and mortgage rates remain favorable for buyers for the spring selling season.


The supply of homes measured in months on the market, if sales continue at their current pace, remained stable compared to the previous month.  This is the third-lowest level since June.  Inventory levels remain 33% below its peak of 12.5 months in July and only slightly above where it was last year when the tax credit was in full swing.

Additional Information for Buyers and Sellers

Staging is an increasingly important component, not only in selling a home but also in attracting would-be buyers.  Even with all of the commonly accepted advantages of staging, only about 1 in 3 sellers stage their home.

The average increase in list-to-sell in stages homes: 1.07%?
The average cost of staging: $250
?Potential benefit based on a $200,000 home: $3150

The Internet is one of the main sources of information buyers use during the home search process, and staging is key to showing the home at its best online.

Rooms that sellers stage most often:

Living Room: 73%
Kitchen: 64%
Master Bedroom: 58%
Dining Room: 49%
Master Bath: 45%
All Rooms: 37%
Office: 16%

The cost of staging is minimal compared to the benefits: more showings and ultimately a higher percentage of asking price.

For further clarification of any of your real estate questions, please do not hesitate to call me or any member of the Barb Bottitta Team at 610-398-8408.  Each and every person’s needs are unique, and determining if now is the right time for you to buy or sell a home can be addressed.

Are you one of the many buyers or sellers out there who want to make a change in your living situation?

Why Choose Our Team?

Each member of the team is an expert in their area and contributes to the synergy. Our well tested systems will smooth the way from starting line to contract dotted line. Contact us for Real Estate services that exceed your expectations and help you achieve your home buying and selling goals.

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