Interest rates are rising, but that hasn’t hampered buyer demand. This means prices are rising and should continue to rise.
Now that we’re into June, what do the latest statistics say about our market and what we can expect throughout the rest of 2018?
First off, interest rates are on the rise due to our strong economy. According to Freddie Mac, the average 30-year fixed rate started 2018 below 4%, but by the end of the year, that number could surpass 5%. Even though rates are rising, our housing market is in a good position to adapt. A constrained supply of available homes, persistent demand, low unemployment, and a steady economy have given a jolt to home prices. Higher interest rates are generally a good sign for home prices, and they haven’t affected buyer demand. In general, they should have a positive effect on home prices for the next couple of years.
However, if you’re a move-up buyer who needs to sell in order to buy, don’t wait any longer to make your move, because rising interest rates could present a problem for you. Not only are you paying a higher price for your next house, but you’ll also pay a higher interest rate.
The number of home searches versus the number of available listings indicates our overall lack of inventory, especially in the lower end of the market:
- Starter homes: -6.3%
- Trade-up homes: -4.8%
- Premium homes: +11.1%
Starter homes represent the least-expensive part of the market, so that -6.3% explains why many first-time homebuyers are being priced out of the market. Since demand is strong but supply is weak, prices should continue to increase.
A good indicator of both buyer demand and future sales is buyer foot traffic, or the number of people who actually walk through the front door of a home they’re interested in purchasing. Our market’s buyer foot traffic was much stronger during the first four months of 2018 than it was during the same time last year. April 2018, in particular, obliterated last year’s numbers.
“Overall, prices have increased dramatically over the last five years.”
This means people are more positive about the housing market going into the summer home buying season, which is great news because buyer activity is usually much slower during this time. Interestingly enough, in the starter-home and trade-up home markets, we’re in a seller’s market. Nationally, median home values rose about 8% in March compared to the previous year. Here are the total year-over-year price changes by price range overall:
- Low price: 9.6%
- Low to middle: 8.6%
- Middle to moderate: 7.2%
- High price: 5.8%
Again, these numbers indicate our lack of supply in the lower price points. According to CoreLogic, homes in these price ranges have appreciated 55% in the last five years. Even homes in the higher-priced markets have appreciated 35% during the same time period.
If you’re interested in selling now and getting top dollar for your home, give me a call and I’ll have buyers lined up outside your door.
Also, don’t forget about my next Home Selling Sharks seminar, which is happening on October 13. At this seminar, I’ll give you more tips on how to sell your home stress-free for top dollar. You can visit www.homesharkseminar.com to learn more details and sign up.
As always, if you have any other questions or real estate needs, don’t hesitate to reach out to me any way you can. I look forward to hearing from you.