State of the housing Market

The beginning of each year is usually the most difficult to get a read on the market. Its not until the selling season of February, March, and April until we can fine tune our forecasts and analyze more data.

Many experts and some federal reserve members predict we are done raising interest rates for a while.

The last rate hike was in December of 2018 and before that we seen rate hikes in March, June and September of 2018.

Some think the fed could possibly continue with some rate hikes but others don’t believe that the be the case.

On January 10th the federal Reserve chairman Jerome Powell said that US central banks can be patient when it comes to future rate Hikes.

The last couple of years we have seen sales prices moving up rather rapidly. With 2018 rate hikes and rapid appreciation many home buyers got “sticker shock” on affordability especially when looking back at only 3 years prior. 

We have seen a production deficiency over the past ten years meaning there was very limited inventory. With the good economic fundamentals, we expect that will increase consumer confidence and will help bring up the market. 

In the broader picture rates are still very low. Many homebuyers feel they missed out on when rates were in the 3.00-4.00% However historically rates are on average in the 6-7%. We even saw in the 80’s and 90’s rates in double digits. 

What does that mean for people thinking of buying or selling?

Buyers: Now could be the right time to buy a home when you consider interest rates in the mid 4%-5% range and home prices are starting to level off which means buyers will be able to negotiate more so than in years past.

Sellers: If you have had thoughts of selling but held off because of the rapid growth in appreciation now could be the right time considering we have seen a leveling off. If rates do continue to increase over the next 12-36 months, we can see buyers purchasing power decrease. In addition, if we see a shift and if more inventory comes to the market, we can see the market absorption rate increase giving buyers more negotiation power with a possible buyers’ market.