In the real estate market, inventory in many locations is up, but so are interest rates and prices. For those considering moving a new home, here’s what that means:
Finally, more choices in homes. After years of very tight inventory and multiple offers on every home, inventory is catching up with demand in the west. Data from the National Association of Realtors (NAR) shows that “months of supply”—a leading indicator of housing supply that divides the number of active listings by the pace of sales—has ticked up year-over-year in the last few months after years of declines.
Less buy-now pressure. Buyers are getting some reprieve from the rapid price escalation the market has been experiencing. According to the NAR, pending-home sales are stabilizing from rapid increases and are down year-over-year by 7.4 percent. As inventory goes up, higher home prices will continue to slow with the higher end of the range demonstrating greater market softness.
The wild card of rising interest rates. Most experts expect interest rates to continue their upward march, and many predictions put 30-year fixed rates at around 5 percent by the end of 2019. Remember, when interest rates rise, monthly mortgage payments go up.
Chart: Jeff Andrews | Source: Federal Reserve Bank of St. Louis
In markets where home prices have hit a ceiling, it’s likely rising rates will cause home prices to drop because something will have to give in order for people to be able to buy a home. Unfortunately for those home buyers, the price drop won’t result in lower payments, but they will pay less on the principal of their mortgage and more on interest over time.
This means buyers like yourself have more choices, but you’ll have to move quickly to avoid higher prices and higher mortgage rates. If you are selling a home first, remember it may take a bit longer, but you’ll still get a good return thanks to years of appreciation. Talk to us today about the next step in your property path, so you can enjoy the fruits of your fast action tomorrow.
We'll find a branch near you. You can also visit the locations page or contact us.
Simplify the payment process by having your card sales deposited into your business checking account.
As a community-supported bank and locally operated business, we are proud to offer flexible and rewarding banking options to local businesses.
No matter what stage of the wealth cycle you’re in, we can help you plan ahead and think forward.
Follow Columbia Bank