In the past few years, the real estate market saw record sales numbers while the mortgage rates remained low. What does this mean for the real estate future? Will the market still show growth? It can be tricky figuring out what you should do when it comes to real estate. According to the Local Records Office in Norwalk, CA, whether you’re buying or selling, these are some of the trends that will be affecting the housing market.
Home prices are still increasing
The median home prices this year won’t see the same growth it had the previous year, but the increase is not showing signs of stopping any time soon. The demand for homes in the Los Angeles area is overtaking the current supply nationwide. New home sales are expected to reach up to $704,000. That’s an almost 11 percent increase compared to last year.
Where the market is showing signs of slowing down is in the existing home sale price. The expected growth for the median sale price is only a 4 percent increase from last year averaging around 270,400. Still, these numbers are promising for the real estate market, showing a stabilization that is welcomed
Las Vegas; Fort Collins, Colo.; Colorado Springs; Dallas/Fort Worth; and Columbus, Ohio are some of the areas that are projected to have home price appreciations that exceed the national average over the next three to five years. However, higher housing prices do not always mean that those houses will sell.
Lower interest rates
The mortgage rates have been hovering just below 5% for quite some time. As long as these rates remain relatively low there will be plenty of new buyers looking to take advantage of them. The good news is that the government is regulating the rates to prevent them from going all over the place.
As long as the rates stay around the 5 percent where they’re at, the real estate market will remain in a good shape for the year. Mortgage rates may increase if inflation kicks in and economic activity reacts, but there isn’t any evidence of that to likely happen. The mortgage rate and to an extent the real estate market are likely to even out in the next few years.
More millennial buyers
There is an increase in younger buyers in the market. Despite the common belief that Millenials don’t want to own homes, many are willing to save up enough to finally make the big move. The rising cost of rent combined with the continued low-interest rates makes homeownership more appealing than ever.
The issue many of them are facing is the current housing market in major cities is too slim. According to the Local Records Office, millennials are ditching old ways of purchasing homes.
The areas most affected by this are rapidly growing cities like Austin, Nashville, and Raleigh, North Carolina. Recent job growth in these cities is incentivizing first-time buyers to move there.
Larger cities might have increased housing pricing because of their bigger population, but with the higher rent cost of luxury apartments, people are considering buying homes further from the city or in other parts of the city that might be underdeveloped.
A shortage of new homes
There is currently a construction boom expected to happen. In small towns and even in some cities, new construction for housing is going up to fast. Suburbs are popping up where there was only a plot of land last year and neighborhoods are being sold even before they’re finished.
The rise of prices in existing homes is also encouraging people to consider getting a new home built instead of waiting for the prices to go down. People are also able to get more customized homes when they are part of the building process from the beginning.
A lot of first-time buyers are less picky about the exact location of their homes as long as it has all the amenities and features their looking for. Places that are a bit further from larger cities or major highways are seeing a spike in sales where they normally wouldn’t in the past.
Slowing down instead of crashing
Things are looking stable for the real estate market. Unemployment and interest rate are at a record low. People have jobs and income enough to consider purchasing a house maybe for the first time.
The days of endless double-digit price increases might be over, but the real estate market is still showing room for growth as the year goes on. With the increase in housing needs being met with new constructions and previously less popular locations being considered, the market is in good shape for slow but steady growth.
The worst-case scenario is another housing crash happening as we enter this new decade. However, that outcome looks less and less likely to occur with the way things are currently playing out. It’s hard to say for certain, there are a lot of external factors that may affect the real estate market. Most experts are optimistic about the coming years as things start to stabilize.
With the way things are looking, now is a good time to be a homeowner looking to sell. The demand is high in most major cities and surrounding areas and people are looking to take advantage of the stability 2019 brought. If you’re a buyer, you might not have many options for existing homes, but there will be plenty of new choices with the recent increase in the construction of new homes occurring in the suburbs.