As you can see from the above “UBG Monthly Update”, prices are still rising, however, the rate of increases is showing signs of moderation. Also, available inventory is still shrinking but the rate of inventory decline may be moderating. For right now, we are still in a strong “sellers-market”--meaning that if no other homes come on the market we would run out of inventory in less than 3 months. So the less the inventory the more it is a seller's market.
What to do if you’re a buyer, should you wait for the market to cool? If you’re a seller, then does that mean you can ask a whole lot more for you home? These are great questions-- so let's address if you are a buyer- looking back 30 some years of data (taking away the "bubble years") the market traditionally will provide 3-5% equity in your home... given we are exactly where we would have been, price wise with out the bubble. Buyer's should feel consider the Feds are about to tick up the interest rates again. Address the seller's side- since your home still more than likely will need to get through an appraisal, staying in line with the market is a good idea. You don't want to chase the market-- homes being listed for more than 60 days are traditionally seeing large drops in price to attain an offer.
Now, in order to put some data and predictability around these buyer/seller questions, let’s take a quick look at what’s changing in the market today, and more importantly, what’s likely to come next.
The fed has discussed it’s plans to raise rates (modest increases) twice more this year, and maybe three times in 2019. The good news behind this plan is that it should bring a better “balance” between buyers and sellers because the number of qualifying buyers will decline (less demand). If you borrow $250,000 to finance your mortgage, a rate increase of 1% (e.g. 4.5% to 5.5%) will cost you $298/month! I have seen this happen before-- buyers get squeezed down to a price range they are not comfortable with, because the rate adjusts.
So, what do buyers and sellers do?
Buyers should consider how much waiting will cost them in increased monthly payment(s) (over 30 years!). If you can wait, there will be more inventory, and home price increases will moderate (but slowly).
For sellers, yes, prices will continue to rise for some time, probably through early to middle 2019, but at a more modest rate. However, rising rates will reduce the number of potential buyers (soon, not many multiple offers on homes) and that could eventually impact your asking price by forcing price reductions.
For more one what is happening please contact me and we can chat about your specific details.
And remember to use a "Beery good" agent!