2018 was a difficult year for real estate, with many Americans priced out of the Home market. Home values were climbing by as much as 5.4% year-over-year in October, before dipping slightly to 5.1% at the end of the year.
Some industry analysts now believe that prices will trend downwards, thanks to economic slowdown and higher lending interest rates.
Home Market Prices Likely to Cool in Most States
Home prices today are still more expensive than they were in 2017, but the rapid price growth of 2018 has likely come to an end. A January report by property data company CoreLogic shows that asking prices are now falling.
The company said in an analysis statement that “The rise in mortgage rates has dampened buyer demand and slowed home-price growth. Interest rates for new 30-year fixed loans averaged 4.9% during November, the highest monthly average since February 2011. These higher rates and home prices have reduced buyer affordability.”
With less buyers interested in the market due to high prices and interest rates, sellers are likely to reduce their asking prices to close sales faster. Oversupply is also reducing buyer interest. This too should send prices downwards towards more sustainable levels.
Economic Signals are Reducing Confidence in the Market
Sellers are typically more positive about the value of their properties during a strong economy. Unprecedented economic growth in recent years was one reason for overpricing in most states. Now that the economy is cooling, sellers will be more likely to list their homes at lower prices, for fear of an economic recession.
Federal interest rate hikes will likely slow this year, so mortgage rates should remain relatively stable throughout the first quarter. The average 30-year fixed rate dropped as low as 4.61% in December.
With high national inventory and shrinking demand from buyers, you’ll be in a better position to negotiate in 2019. A cooling stock market will also be a benefit, as many sellers tie their perception of the economy to equity performance.
All these factors come together to create good buying opportunities. It’s now much more of a buyer’s market, and if you are ready to buy your first home or a move-up home, then 2019 could be your best opportunity.
You may be interested
Job Hiring is Picking Up as Employers and Consumers Gain ConfidenceLamont J - March 29, 2021
The recent government stimulus for small and medium-sized businesses, personal stimulus checks, and declining Coronavirus cases, are all great news…
Fed Could Maintain 0% Interest Rate Until 2024Adam R - March 26, 2021
The Federal Reserve is holding its target interest rate in a range of 0.00% - 0.25%, even while the economy…