In the end of 2018, average home sales slowed in the United States. In 2019, home sales reports are showing a drop in home sales year-over-year for the same month. Meanwhile, real estate inventory has begun to increase and is expected to continue to increase throughout 2019.
That would seem to be good news for first time home buyers. With lower home sales and higher inventory, you would expect incredible deals out there. There are deals to be had, but the expected new listings, projected as an increase of less than seven percent, will be luxury homes in expensive housing markets which aren’t affordable for most first time home buyers.
There’s more of the good-bad news. According to Realtor.com, the prices of home sales has slowed to 2.2 percent. That is a slower rate of growth than we have experienced in the past few years. Slower home sales mean sellers may be willing to accept offers or concessions in order to entice buyers. However, since mortgage rates were raised four times in 2018 and will have another rate hike in 2019; that means housing is less affordable. Oddly, following the December 2018 rate hike, mortgage interest rates were actually lower due to concern over the lowered confidence. This indicates the market may determine no rise in mortgage interest rates in 2019 after all. (The Fed cited lower confidence in economic growth when it announced that it would reduce the number of interest rate hikes in 2019 from three originally announced, down to one interest rate hike in 2019.)
What it Means to You:
There will be more homes to choose from in 2019 than have been available in recent years. If you are currently shopping for your next home, you will see more options listed for sale. The homes listed will likely be higher end homes, but there will still be bargains on less expensive homes if you are patient. The interest rates, while higher than two years ago, will not be crazy high, so affordability has not drastically changed.
Sellers will be motivated to sell, as a slowing market turns the seller’s market into a buyer’s market. Higher real estate inventory means more sellers will be willing to work with available approved buyers. If you are home shopping, get approved, and ask for concessions if it helps you get into the home you need.
Avoid overpaying for your next home. More news reports publish concern that a recession by 2021 is indicated. Make sure the purchase price of the home you are buying does not exceed the appraised value. It is also a good idea to keep your mortgage amount within a comfortable affordability range to avoid being caught upside down on your home, (owing more than the home is worth) with no exit.
Happy Home Buying!