What Drives The Real Estate Market?

What numbers drive the real estate market and what are they doing?

1.      Number of Homes Sold

2.      Home prices

3.      Inventory

4.      Mortgage Rates

5.      Housing Affordability Rate

·        Home sales dropped 13% in 2008 but purchases by first-time home buyers increased to 41% of all purchases.

·        Median home prices declined nationally by 9%.

·        The supply of homes available in the market (inventory) pushed up to a 10.4 month supply nationally.  We are in a Buyer’s Market.

·        Mortgage rates are fantastic!  Rates hovered around 6% in 2008 and have dropped further in 2009 creating lots of opportunities for first-time and move-up buyers.  (Note: move-up buyers are also SELLERS).

·        Affordability in 2008 was 19%.  That’s a positive trend!  Housing affordability is the percentage of median family income required to make a mortgage payment on a median-priced home.  In this case, the lower the number, the better! 

What were some of the events that drove those numbers?

·        An increase in the number of short-sales and foreclosures edged home prices downward and may continue to do so in 2009 in our local market.

·        Banks have tightened their lending standards.  However, financing remains readily accessable to qualified buyers.  Gone are the days of “sub-prime" and stated-income type loans.

·        First time home buyers were a larger percentage of the market due to lower interest rates and improved affordability. 

·        Bank failures and mergers increased.  346 banks were taken over by the FDIC.

If you are interested in learning more about our local real estate market, check out our blog on http://www.mainerealestateinformation.com/ or give us a call at 207-689-9880!  

Also, take a look at our Total Market Overview for ongoing statistics from the local market.