Just SoldIn Elmhurst and across the US, the economy continues to improve. As a result, we are seeing a rise in housing demand. This rise in demand was expected, especially after five years of suppressed household formation.

Household formation is an important statistic in real estate market trends. Simply put, household formation looks at how individuals group together to form a household. It mirrors the growth and economy of a society.

We saw less household formation than usual between 2007 and 2011, due to the poor economy. Newlyweds weren’t able to afford to purchase a home and decided to rent, college graduates opted to live at home with their parents, homeowners weren’t interested in putting homes on the market in a bad economy…there weren’t many individuals wanting or needing to buy a home. This has all changed as the economy is picking up. Household formation is rebounding, and will likely continue to do so for several years.

Home prices have risen over 10 percent of last year’s numbers. This steady increase in appreciation is due to the supply and demand we’re experiencing in the market. As both household formation and the economy rise, so will the demand for housing.

Home prices are forecasted to continue increasing for the remainder of 2013. These prices aren’t deterring buyers, however. Pending contracts and closed sales are at their highest in the last five years. Homebuyer traffic activity, an element used to monitor market buying, is at record highs. Many sellers are seeing multiple bids--sometimes even bids with an escalation clause. Buyers are offering these escalation clauses in hopes of winning a home in a bidding war. These buyers are turning up after a 13-year low on existing home listings, and a 50-year low for newly constructed home inventory. As a result, buyers are forced to make do with these increased prices if they want to get a new home.

This shortage won’t be rectified overnight, but there is hope for further inventory to meet this new demand. There are “accidental landlords” as they’re referred to in real estate. These individuals are homeowners who couldn’t afford to sell their home but needed to move. Instead of putting the home on the market, they rent out the property to cover mortgage payments and expenses. As the real estate market continues to improve for sellers, these landlords may opt to now put the home up for sale.

Another option is with investors. Real estate investors often own multiple properties, to sell when they feel the time is right. The current market trends could entice investors to put homes on sale as well, though this may take time. As investors see prices increasing continually, they may take advantage and hold on to the homes, seeing just how high prices will get.

Despite the current inventory shortage, Gracik Makinney Real Estate Group is excelling with both buyers and sellers. As you can see from last week’s post, the Elmhurst Coldwell Banker Residential Brokerage is having a great year! Allow us to help you find and buy your next home, or sell your current property. Gracik Makinney Real Estate Group is your answer for real estate in Elmhurst. Call us today at 630-441-5570 or stop by our office right here in Elmhurst at 190 North York Road.