Just in case no one in the Cedar City Real Estate Market has noticed, we are running out of inventory. I know that may not be earth shattering news, I mean after all, Peyton Manning got released today! We are really running out of inventory for the first time home buyer market. In fact, homes listed under $135,000 that are in decent to good condition (and stick built) likely will have multiple offers within 24 hours after hitting the multiple listing service. I am talking about single family detached homes.
We just had a notice posted by the local board of Realtors of an article written by the Utah Association of Realtors that January 2012 was the best January in the past 5 for home sales. January, according to this article was the 8th straight month of increased sales when compared to the same month of the previous year. These UAR figures were based both on existing home sales and new construction home sales.
What does this mean to you the consumer? That becomes a very important question! We have clients who just today told us that they were wishing that they hadn’t waited six months to really start looking after they decided that it was time to buy. The rising cost of gasoline and diesel fuel is going to affect the construction price of new homes, which will increase the demand on existing homes that reach the market. We know what increased demand equals; of course it equals higher prices.
Darcy and I were talking just the night before last that we are going to have to see a big spike in new construction in the Cedar City Real Estate Market just to satisfy the demand of the entry level home buyer. We made that comment without factoring the daily 20 Cent jump in gasoline prices into overall construction costs.
My big fear now becomes once the last of the shadow inventory hits our market, the first time homebuyers will be left renting, as the price point of housing will be too high for the typical first time home buyer in the Cedar City Market. This is a scenario that is never good! In fact, it is the worst of all scenarios, because it will lead to inflation, which is something that none of us want to see in the economic recovery! I guess that the point I am making is, that in my opinion, now is the time to act! Get into that new home before inflation and increasing prices make it impossible to buy.
This is especially true if you’re looking to build a new home. Politicians spend too much time blaming each other to adequately address the danger that rising fuel prices pose to the economic recovery. Everything that we consume from the food that we eat to the clothes that we wear is delivered from somewhere else. This is true of construction materials for houses, not to mention the cost of the workers to and from the job site. We just don’t have the inventory of houses right now to meet the demand. New home construction is always a major factor in the health of the economy. Here it is the first time home buyer right now that is driving our real estate market. If new construction is too costly to keep up with demand, we run the danger of falling back into the trap of this past recession, a glut of homes that no one can afford to buy.
Most realtors will tell anyone that if you’re looking to buy or invest it is one of the best markets that we have seen in many years, price points in Cedar City are at 1998 or 2000 levels, but our inventory level is the lowest that it has been in years. I know that if I were thinking of buying or building a home in the near future, I wouldn’t wait any longer, I would get started as soon as possible!