Buyer Demand Is Up! Home values are up and distressed sales (foreclosures and short sales) have fallen to their lowest point in years. The market will continue to strengthen in 2019.
However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory! Buyer demand naturally increases during the summer months, but supply has not kept up.
Why the increase in demand? Increased buying power.
According to the National Association of Realtors’ Economists’ Outlook Blog, purchasing a home has become more affordable, which has led to increased demand.
“Due to the combination of falling home prices and mortgage rates, the income needed to make an affordable mortgage payment (mortgage no more than 25% of income) on a median-priced home with 10% down payment and 30-year fixed rate mortgage decreased from $60,425 in June 2018 to $53,783 as of February 2019, and the difference of $6,642 represents a gain in buying power because one can afford a home purchase at a lower level of income.”
Here are the thoughts of a few industry experts on the subject:
“Further increases in inventory are highly desirable to keep home prices in check, the sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”
“There’s a supply-demand mismatch… More inventory is needed at the lower end and a price reduction may be needed at the upper end.”
“Heading into spring, U.S. prices are expected to continue to rise and inventory is expected to continue to increase, but at a slower pace than we’ve seen the last few months as fewer sellers want to contend with this year’s more challenging conditions… A buyer’s experience will vary notably depending on the market and price point they’re targeting.”
If you are thinking of selling, now may be the time! Buyer demand is up and the low housing inventory means demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price!