Moving Ahead With This Sustainable Recovery
We are into the fourth quarter of 2015 and this much about the year is clear: it has been a great real estate market to date, as many buyers who were waiting for the right time to make a move took action. The number of houses sold in our area is much greater than this time last year. With housing prices stable, and mortgage interest rates at historic lows, this favorable market will likely continue. For buyers, and for sellers who are “buying up” with their next home purchase, it is a good time to move ahead with this sustainable recovery!
Consumer confidence is rising, as is job growth. With an unemployment rate hovering just above 5%, we are very close to what economists call “full employment.” And what has been the missing link in our economic upswing–wage growth–has at last begun to show improvement.
An abundance of international news–oil prices, a strong dollar, and concerns about Asia–has resulted in a significant financial market downturn. It’s logical to ask what effect this has on the real estate market in our area. I believe this will be a slight headwind, not a significant one. We may attribute a modest decrease in the rate of growth of home sales in the second half of this year to pent-up demand being satisfied. Even so, sales units continue to rise at a steady pace.
It does appear that this financial market uncertainty may be affecting the high-end market, which is taking longer to recover. But there is a silver lining: this has caused the Federal Reserve to remain cautious about raising interest rates. So don’t let the headlines hold you back. Owning a home in our marketplace has proven to be a great long-term investment.
There is one drawback to our current buyer-friendly market: a lack of inventory of houses for sale. The number of homes available for sale has decreased 28% in the past two years. This limitation means that buyers should move quickly when they find a home that they like and that is priced right. We are seeing that properties correctly priced and in excellent condition often receive multiple offers.
The lack of inventory presents a terrific opportunity for consumers who wish to sell their home and either “move up” or downsize, based on their life circumstances. Inventory is needed to meet demand, and a buyer is very likely waiting for a home like yours to become listed on the market! However, keep in mind that today’s buyers are very careful about value. They won’t purchase properties that are priced too high, and they expect them to be in move-in condition.
Most economists agree that this recovery is sustainable and will go on. But, we know that the Fed will raise interest rates in the not-too-distant-future. Every increase in mortgage interest rates translates into buyers paying more for what they can get today. And, as the economy continues to grow, home prices will also begin to increase. This change may happen slowly, but it won’t take long for those who delayed to look back and realize they missed the best opportunity.
If you want to buy a new home, isn’t it time to move ahead? Contact your BHHS Fox & Roach sales associate and Trident mortgage consultant today!
Lawrence F. Flick, IV
Chairman and Chief Executive Officer
Berkshire Hathaway HomeServices
Fox & Roach, REALTORS ®and the Trident Group