Selling a House? Here Is What the Market Looks Like In the USA

Selling a House? Here Is What the Market Looks Like In the USA

Selling a House? Here Is What the Market Looks Like In the USA

The US 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 slow down since August.

Higher interest rates and rising home prices are driving sellers away at the moment. Stats from August till 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?

Seller’s market shows 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 factor also plays 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 US.

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 US 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. Shall the interest rates rise, most buyers can 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 it is said about the 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.

Conclusion

Is it a good time to sell a house? It definitely is. The economy is still strong on its feet and all the factors point towards 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.

 

 

 

WRITTEN BY JENNY HARRISON

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Becoming a first-time homeowner takes a lot more than a desire to buy a house. It takes a lot of effort on your part to save up a down payment — which is usually a pretty good sized chunk of change — research neighborhoods, get pre-approved for a loan and other steps. Fortunately, it is quite possible to say goodbye to renting and hello to homeownership, especially when homeowners-to-be consider the following tips:

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Check Your Credit Report

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June 14, 2018
storm cloud near roofline

Rising interest rates and the economy are the top two current issues to watch in real estate, according to the Counselors of Real Estate’s Top Ten Issues Affecting Real Estate 2018-2019, a list of the biggest threats to the housing market. For the first time, CRE broke its annual list down into current and longer-term issues to watch during the industry’s next year.

Top Current Issues to Watch

1. Interest rates and the economy: As interest rates rise, commercial and residential real estate markets are seeing several changes, such as decreasing demand for commercial property and higher home mortgage rates. Rate increases are making homes less affordable and are also limiting the value appreciation for commercial real estate. “Lack of wage growth for all but the wealthiest population segment is dampening housing demand, and limiting consumer spending that the economy needs for growth,” the report notes.

2. Politics and political uncertainty: Tax reform and policies aimed at balancing trade with other countries will have an impact on jobs, incomes, and both commercial and residential property, according to the report. “Congressional action to relax certain bank lending and asset management regulations was also among developing trends that may improve access to capital,” the report notes.

3. Housing affordability: The lack of affordable homes across income brackets, excluding the most wealthy, is being fueled by low wages, rising mortgage rates, and the underproduction of housing for nearly two decades, according to the report.

4. Generational change/demographics: Four distinct generations are exerting influence on commercial and residential real estate, such as in office design, student and elder housing, amenities, and location preferences.

5. E-commerce and logistics: Volatility in the retail sector, such as from the increase of e-commerce, is leading to a growth in warehouses.

Top Longer-Term Issues

1. Infrastructure: Roads, bridges, airports, water and sewer lines, electricity, and public transit are rapidly deteriorating, the report notes. An estimated $4.5 trillion is needed to improve critical infrastructure by 2025, according to the American Society of Civil Engineers. “The lack of serious effort by the U.S. to address its condition and much-needed revitalization leads the list of broader and emerging issues affecting real estate,” the report notes.

2. Disruptive technology: The report highlights advances in robotic manufacturing and warehousing; driverless cars and trucks; the extensive availability and utilization of personal and transactional data (aimed at enhancing business decisions); “smart” building technology that enables efficiency; global connectivity; automated business processes; and information protection through cybersecurity. “Nearly every aspect of real estate is undergoing dramatic change as these types of technology are adopted,” the report notes.

3. Natural disasters and climate change: The ongoing threat of natural disasters and climate change can result in high-priced property and environmental damage. This includes everything from severe storms, wildfires, and floods to earthquakes, volcanic activity, and rising sea levels.

4. Immigration: “If reduced by law, will have a negative impact on new housing starts and home purchases as well as worsen the current skilled labor shortage in the U.S.,” the report cautions.

5. Energy and water: Natural resources that are vital to property and quality of life are being threatened by environmental damage (manmade and from changing climates) as well as “entangling state and local regulations that are complicating development and lack the standardization that national regulations would provide.”

CRE additionally notes several other issues making its “watch list,” including rising construction costs; urbanization/suburbanization (with suburbs adapting citylike development and amenities); tax cuts (which may positively impact commercial properties; legislation is still developing); and societal leadership (social activism among younger Americans that is fueling business and social reform at many levels).