Though home prices have grown by 5% and new home sales are up 7.4%, real estate selling trends show existing home sales down slightly by 2.2%, leading many to worry. Is a downturn on the horizon? In the shadows of the 2008 housing market crash, how steep and how fast will it occur?
The Sky is NOT Falling
Despite higher mortgage rates and home prices, real estate selling statistics show home ownership rates inching higher, from a cyclical low of 63% in late 2015, to 64.4% in the second quarter of 2018. While the rental market remained neutral, 3 million new homeowners were added to the books. What’s more, aggregate owners’ equity is expected to grow $1.4 trillion this year, bringing net housing equity to over $15 trillion. At just $6 trillion in the depths of the market crash, today’s market actually paints an impressive picture.
The Bubble Won’t Burst
Today’s market is fundamentally different from that of 10 years ago:
– Lending standards are stringent, with those capable of securing a mortgage showcasing higher than normal credit scores.
– Defaults and foreclosures are at historic lows.
– Overbuilding, seen in the start of the bubble days, is a non-issue (in fact, quite the opposite).
So What’s Hindering Home Sales?
Limited housing inventory. We have gone from oversupply during the crash, to falling levels for 8 of the 10 past years. Homes are selling at a record pace. It would take only 4.3 months to exhaust total inventory. Demand is there, supply is not, creating the source of market headaches.
To meet market needs and boost affordability, new homes must be built, with starts expected to rise in 2019, though lumber tariffs, labor shortages, and locating space for new development will continue to temper growth.
Know when to look up, when to look forward, and when to duck for cover. Prepare for the future of real estate selling with the help of Properties Online today.