Monthly Residential Property update for the entire County
Recently, the housing market in US faces the worst slowdown in new construction and short supply of existing homes for sale that pushed housing prices so high. Because of extreme prices, buyers either finding themselves in bidding wars or sitting on the sidelines which is worse for real estate market. Real estate agents also feel pressured and worried as homebuyers are stepping back from high prices. What’s causing chaos in housing market, in the midst of what otherwise looks like upbeat growth? Housing market is a victim of economy’s success. The Federal Reserve is looking forward to keep inflation in check by raising interest rates, making mortgages more expensive.
In addition to that tariffs on imported lumber and crackdown on immigration have made it more difficult and expensive for builders to obtain the labor and materials they need to construct homes. According to the National Association of Home Builders, it’s not exaggerating in hot urban markets where the land is very expensive and zoning can be restrictive. The mortgage giant Freddie Mac wrote, the housing market will stay slow for the rest of the year but it doesn’t see any real trouble on the horizon. The healthy economy and robust labor market should support homebuyers’ demand. Let’s get better idea of what’s happening in housing market.
New home construction
New home construction is flattening out but has moderated in recent months. This causes a persistent lack of supply not only in for-sale market but also affect the rental area. The rental vacancy rate is also low as it’s been since the early 1990s.
Housing prices
Home prices are continuously on rise. Slow growth of new home construction has driven up home prices quickly especially in hot markets. Still some areas haven’t regained the value lost during the Great Recession. Growth of home prices are slowed down slightly in June, the 20-city composite measure topped its pre-recession high at the beginning of 2018.
Existing home sales
Existing home sale is very low as compared to the good times. Buyers are buying fewer homes. High prices and low inventory have slowed down the entire housing market, which is mostly made up of previously owned homes. For the fourth straight month in July existing home sales reach to the lowest level in the past two years. Chief Economist Lawrence Yun, National Association of Realtors wrote, “Additional inventory will help contain rapid home price growth and open up the market to prospective homebuyers who are consequently and increasingly being priced out”. Americans are already relocating far less than once they used to and this creates a drag on the job market as well which makes it more difficult to move to a new city for better employment opportunities.
Foreclosures
Foreclosures starts are raising high in recent months again. During the financial crisis foreclosure plagued the housing market. Home prices lurched and borrowers struggled with loans they couldn’t afford but now they are in much better shape. But now market is indicating that foreclosures are on the rise again. Since 2015 foreclosure starts are increasing again for the first time. The trend is predominantly notice in hurricane-hit cities. But on the other side that turn in the numbers likely isn’t a sign of looming breakdown.
August 2018 National Housing Report
August 2018 shows the increasing home prices, reduction in days on market and low inventory. All these factors made August sixth time this year when home sales lagged behind last year’s pace-but only slightly at -1.1 %. It varies from market to market but generally, now sellers are becoming more pragmatic and buyers are being more selective. In the hottest markets this dynamic could bring inventory level up, where we expect to see the clearest signs of equilibrium returning. Economy is successful and willing buyers just need more listing to purchase at the right prices. We hope that balance will return beneficial for everyone in long run but it’s just a matter of “when” which nobody know.
Record prices in August 2018: The median sale price in August 2018 is $248,500 which marked this month as 29th consecutive month of year-over-year price increases.
Days on Market Decreases: In August 2017 the average days on market was 47 and average market days for homes sold in August 2018 was 43.
Active Inventory Dropped: In 2018 the number of homes for sale was down 1.0 % from last month and down 5.4 % from August 2017.
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