Housing market
What say you?
Supply and demand plus affordability are the primary drivers of the housing market. When supply is low and demand is high, as it has been for years, home prices rise rapidly. As prices and mortgage rates rise, affordability declines. As affordability declines, buyer demand declines. As homeowners start to feel their value has recovered, and maybe even topped out, they will put their homes on the market, increasing supply. When these two happen at the same time, or quickly, we feel a shift in the market from a seller's market to a balanced market. We have always looked at absorption rate to help us understand the market but I believe we also need to watch consumer behavior.
Interest Rates: When money is cheap and plentiful, there’s more demand and prices tend to rise (inflation). The Federal Reserve announced its third interest rate hike this year and many expect another in December. Mortgage interest rates have already been rising for the last five weeks. The Fed announcement will ensure more of the same. The good news is this likely means higher rates on your CDs (certificates of deposit). The bad news is this likely means higher rates on your credit cards... and your HELOC. Raising the federal funds rate also tends to slow the economy which affects employment. Notice I didn't mention mortgage rates? They largely respond to the markets, specifically the bond market.
On average, a 30-year-fixed-rate mortgage cost homebuyers 4.72% for the week ending September 27th. Buyers hadn’t seen mortgage interest rates that high since April 28, 2011, according to Fannie Mae. Last week, the average contract interest rate on a 30-fixed conforming was 4.97%, up from 4.88% the previous week, according to the Mortgage Bankers Association.
How does the increased mortgage rate affect home buyers and refinancing?
Market Confidence: So far in 2018, consumers are still confident and feel now is a good time to sell. In a recent study from NAR, 77% of American said now is a good time to sell while buyer confidence declines. “Though the vast majority of consumers believe home prices will continue to increase or hold steady, they understand the days of easy, fast gains could be coming to an end,” said Yun.
Are you thinking about making a move? Let's look at your LOCAL market together and determine if the conditions are in your favor and what you can expect.
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Hugo, Lino Lakes, White Bear Lake
About the author: The above article "What is the Housing Market Telling You?" was provided by Sarah Marrinan.
With multiple certifications, awards and experience, if you're thinking of selling or buying, I'd love to share my knowledge and expertise. Proudly servicing the following Twin Cities, MN areas: White Bear Lake, Hugo, Lino Lakes, Centerville, Vadnais Heights, Shoreview, Mounds View, Circle Pines, Mounds View, Forest Lake, Columbus, Wyoming, Saint Paul, Minneapolis, Roseville, Lake Elmo, Stillwater and Oakdale, MN.
Visit Sarah's website at www.CallSarahFirst.com.
