2018 took it to a whole new level in terms of low inventory and affordability challenges.
The combination of rising interest rates and rising home prices definitely caused a noticeable drop in mortgage applications, but the historically low inventory was something that most of us have never experienced.
Homebuyers might have a better chance of purchasing properties this year. Some high-priced markets will still have issues with affordability, but overall, the national market, in general, is looking a little more promising for buyers. Here are three reasons why 2019 is looking up.
Lower Mortgage Interest Rates
Interest rates for a 30-year fixed rate mortgage consistently rose throughout 2018 until about mid-November. After that, rates went back down a little, and they have continued their downward trend at the beginning of 2019. The dip in interest rates definitely seems to be bringing some relief to the real estate market.
This is excellent news for potential buyers. Lower interest rates obviously mean improved affordability. If the lower rates persist for a while, the market will definitely see stronger sales, as more buyers are able to afford to buy.
Inventory is Up
Buyers have had a hard time because of a lack of inventory. They have had fewer choices, which can be a deterrent itself, but the real problem was that buyers were stuck in a really competitive market, trying to win over sellers when they’re looking at 15 different offers!
Experts are predicting a more robust inventory this year, which is great news for potential buyers. Whether or not we see a lot of growth across all price ranges is yet to be determined. As long as we see some growth in numbers and not a decrease, it could bring some relief.
Sales Price Growth is Slowing
Prices will still rise in 2019, but likely at a slower pace than it has in the last few years. In 2018, we saw nearly 5% in growth. While experts are still anticipating a rise in home prices, it should hopefully be down to about half of that this year.
For homes in lower price ranges, we may still see rising costs knocking some potential buyers out of the market. Buyers looking at homes priced below the median should definitely look at buying sooner than later.