Increased interest rates led to a lot of analyst speculation in the home market earlier this year. Some feared that the increased cost of mortgages would lead to slower home sales, which would then affect home prices on the market. Despite rates going up, there’s still a strong market with willing buyers, and sellers are making the most of it.
At the end of April, home prices were +6% when compared to their highest peak in July of 2006. In fact, prices have been steadily increasing for more than five years now. This is great news if you are preparing to sell your home, but it might make things costlier if you are looking to buy.
Here are the most important insights to help you understand the home market as we move towards the middle of 2018.
It’s Difficult for Buyers, but Demand is Still High
According to median sale values, buyers will now pay more for homes in every state. Rising costs can sometimes cause a stall in the market, leading to slowed sales volume and an eventual decline. At this stage, it doesn’t look as though we have hit the ceiling. There are still plenty of willing buyers, and real estate agents are having success at moving inventory across the country.
This is partially due to low available inventories, which makes the market much more competitive, and leaves some buyers with fewer options.
Your Mortgage Will Cost More, but Rates Are Still at Historical Lows
If you are planning to purchase a home or even an investment property in 2018, then it’s best that you start the process sooner rather than later. Interest rates are expected to rise again this year and into the next. This is a side effect of a healthy economy. The sooner you sign for a mortgage, the more time you’ll have to take advantage of the interest rates as they are today.
Now is the Time to Act if You Are Planning to Sell
If you’re on the seller’s side of the market, then it is also important that you start the process soon. High demand may not last forever, particularly if prices continue to increase. Homes are still moving quickly in some of the most competitive markets, including Seattle where average prices have increased by over 12% in the past 12 months. The average home in Seattle spends less than a month on the market. Other markets with steep price increases show similar success rates.
How to Use This Information
- If you’re a buyer, increasing prices can be worrying, and it suggests that expediency is important if you want to settle into your new home within the next year. Coupled with rising interest rates, there is a strong argument for buying now rather than delaying to see where the market goes.
- If you’re a seller, there are also benefits to acting now, including cashing in on price growth without waiting around for the risk of a market decline.
Real estate is a complex market where it is sometimes difficult to make a buy or sell decision. There’s always a tendency to wait for the ‘best’ conditions. We can look at all of the trends and historical data, but, unfortunately, there’s never any guarantee of where the market will go next. Conditions currently favor sellers the most, but there are still affordable home options for the average buyer within median or below-median price ranges.
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