By Jenny Harrison
The U.S. economy is doing fine. It is the hottest we have seen since the 1990s. Salaries are high and unemployment is low. Generally, that brings good news for the housing market. Sellers benefit from the fact that there are more buyers in the market. In retrospect, 2018 was largely a seller’s market but things seem to have slowed down since August.
Higher interest rates and rising home prices are driving sellers away at the moment. Stats from August through October point toward a cool down. Home sales are around 13 percent down compared to last year.
Does that mean the market will soon flip in buyers’ favor? What does that mean for someone interested in selling a house?
Things aren’t as simple as they seem. Real estate experts believe that the market will stay on the seller’s side for yet another year. Despite the lack of buyers, sellers will still be able to take advantage of the booming economy and lack of inventory.
If you are interested in selling a house, fall may not be a bad time for you. To know if the market is still on your side, you need to understand how and why the market swings between a seller’s market and a buyer’s market.
When is the market in seller’s favor?
A seller’s market is a good time to sell a house while a buyer’s market means buyers are more likely to find a good bargain.
Many factors affect the market, such as the number of buyers and volume of inventory. A higher number of buyers means a better chance of selling your home at a good price. A higher volume of inventory means buyers have more choices and an upper hand.
Economic factors also play an important part. As the economy improves, so does the affordability. More and more people will own a home because they are more confident about their affordability power. However, excessively high property prices and mortgage rates can often overshadow these economic factors.
So, who does the market favor at the moment? Here are some key facts and findings that will help you get a clearer picture of the current housing market in the U.S.
Higher prices, lower inventory
Higher prices push buyers away from the market, forcing sellers to reduce prices. However, a flourishing economy boosts buyers’ confidence despite the price hike. People are still looking for a home to buy.
There may be fewer buyers at the moment, but lack of inventory balances the equation for the sellers.
Almost all the major housing markets in the U.S. suffer from an inventory shortage. This means even though there are fewer buyers, they have fewer options to choose from. Together, both trends play out well for the sellers. The property might spend more days on the listings, but there is still a better chance to sell it at your desired rates.
Recently, the market has seen an improvement in terms of inventory. The rate of inventory decline is down 2.2 percent from the last year. It is the first annual increase in the housing stock in three years. While it may not be enough to balance the supply and demand equation as of now, it puts sellers in “better now than later” situation.
The fear of future
The housing market is always riddled with uncertainty. Even these uncertainties favor either the buyers or the sellers.
As for sellers, housing prices are unaffected by the gradual rise in inventory. If new homes continue to be constructed at the same rate, it will eventually become more difficult for you to sell your property. The buyers will have more choices and options, and sellers will have to decrease the prices to sell.
On the flip side, buyers are also in a similar dilemma. Mortgage rates don’t seem to slow down and the Feds have shown no intention of bringing them down in the near future. As a matter of fact, mortgage rates are expected to rise by 5 percent in 2019. Should the interest rates rise, most buyers could no longer afford a home despite the increasing inventory and negotiable housing prices.
Due to these uncertainties, many buyers will buy a home right now rather than waiting for the situation to worsen.
The buyers are serious
Currently, millennials make for the majority of the world’s population and most of them have now entered the home-buying age. Contrary to what is said about millennials and home ownership, recent stats show a different side of the story. With the economy in favor, millennials are now interested in buying their own homes. There may not be a lot of them looking for properties, but those who do are all serious buyers willing to pay the right price for the right property.
Moreover, fall isn’t usually a peak season. There aren’t as many sellers as there are in spring and summer. Buyers looking for a home in fall are the ones who are serious about the purchase. With a lack of competing properties, you have a better chance of selling at a desirable price.
Is it a good time to sell a house? It definitely is. The economy is still strong and all the factors point toward a solid seller’s market for at least another year. The uncertainties regarding mortgage rates and home prices may have pushed buyers away, but they also put many in a “now or never” situation. As a seller, this may be your best opportunity to make a move.
Elaine Quigley, CBR, CRS, GRI
57 East Main Street, Suite 217
Westborough, MA 01581
Business: (508) 366-4266
Cell: (508) 735-5161