The spring buying season is just around the corner, and this year the housing market landscape might not be as daunting for buyers and sellers, according to a new report.
The number of homes for sale has been steadily creeping downward, helping list prices stabilize and giving both buyers and sellers a little more confidence. Overall, national inventories have dropped more than 20 percent since last year, according to a Realtor.com report, and houses are staying on the market for shorter periods. List prices are looking up, too, rising almost 7 percent since last February.
"The stage is set for a broad-based move towards recovery should these conditions continue in 2012," the report said. "The nation's housing markets as a whole are in better shape today than at any time since the 2009-2010 tax credits."
Still, the housing market has numerous hurdles to jump before experts are willing to say it's truly in recovery mode. That's especially true when you drill down to state or local markets. Take for instance some of the hardest hit markets—Florida or Phoenix, Ariz.—and they have some of the largest year-over-year declines in inventories and healthy increases in median list prices, both good signs.
But shift to the places that didn't see huge home value run-ups during the housing boom—Chicago, Detroit, Milwaukee—and they're now registering some of the largest declines in median list prices year over year.
Despite the variation local markets are seeing, encouraging numbers nationally can go a long way in boosting Americans' perception of the housing market locally, says Steve Berkowitz, CEO of Realtor.com. So even if your hometown is lagging national trends, the prospect that conditions are improving boosts morale.
"The national numbers set the tone for people, and I think people are feeling the national numbers are stabilizing, so people are feeling good," he says. "What people need to be leery of is that at the local level [the housing market] may actually be recovering faster."
The bottom line is there's still a long way to go before the housing market reaches some sort of equilibrium, Berkowitz says, especially with the gigantic shadow inventory still looming. Experts anticipate inventory to rise as more sellers put their homes on the market this spring home buying season, and as foreclosures held up by legal delays begin to trickle onto the market.
"It's just like the economic recovery," he says. "It's still early and I think there are still a lot of other factors that are going to continue to drive [a housing market recovery], not least of which is people's ability to get a mortgage."
Mortgage credit is key, experts say, especially since most people don't have hundreds of thousands of dollars lying around to buy a home in cash. The good news is interest rates are likely to stay low in the near future, according to the Federal Reserve's announcement Tuesday. As the housing market heats up this spring, low interest rates might have a hand in converting window shoppers into home buyers.