What are you waiting for?
You've read the news and have probably been shocked at what some of your neighbors have sold their homes for. Its no secret that our housing market along the Wasatch Front is one of the hottest in the nation. We have a booming economy, high rates of organic growth, and for the first time in 40 years, our net increase of new households in 2017 out paced the net increase of new rooftops. The demand is real. The growth is not stopping. Availability and affordability is becoming a real challenge; one that can't be overcome over night.
You may have heard your friends say- or your may have said yourself, "Ill buy a home when the housing market slows down" or "This is a bubble and I don't want to buy at the top of the market". This is an understandable and cautious approach in the wake of the 2008 market meltdown. Naturally there is a great deal of apprehension as nobody wants to be snookered by the bursting of another real estate market bubble. One of the main factors that sets this hot market from 2008 is the low inventory and real demand. In this market, the buyers are real buyers purchasing with real loans underwritten with tighter guidelines than in 2008. In 2008, we had very loose lending guidelines, buyers purchasing homes with other people's money and were flipping homes as fast as they could buy them.
You'll want to know the top three reasons why you and those you know don't want to wait to buy a home. Lawrence Yun is an economist for the National Association of Realtors and offers his analysis of the current state of the housing industry nationwide. According to Yun, Homeowners equity currently sits at $15 Trillion, up from $6 Trillion a decade ago. Needless to say, the overall housing outlook is quite impressive. Consider the top three reasons why you don't want to wait to buy a home:
#3. There is no housing bubble. According to Yun, "... since the word “bubble” is on the minds of many consumers, it is worth laying out why today’s conditions are fundamentally different compared to a decade ago. Back then, lending standards were non-existent, with subprime loans everywhere. By contrast, the lending standards today are still stringent, as evidenced by the higher than normal credit scores of those who are able to obtain a mortgage. That is why mortgage default and foreclosure rates are at historic lows. On the supply side, there was overbuilding with 2.1 million housing starts during the bubble years. Today, we are just scratching 1.3 million. Though no one can know the future, the likelihood of a nationwide home price collapse is near nil for the foreseeable future." Click here to read the entire analysis.
#2. Prices continue to increase at a rapid rate. According to the Utah Association of Realtors June market report, home prices are up 9% over the same period in 2017 and are expected to continue at a steady increase through the end of the year. This is great news if you find yourself on the selling end of a transaction. If you currently own a home and are considering a change, remember these factors will impact you. They will impact a buyers ability to purchase your home AND you'll be impacted when you become the buyer.
#1. Rising interest rates. Interest rates are currently hovering around 4.5% and are expected to be at 5% by the end of 2018. This small increase in rate translates to a big impact on a buyer's purchasing power. Jeremy Plouzek with Security Home Mortgage illustrated this impact on consumers when he sat down with Kasby's Kenna Wagner. You can watch the short clip here. Interest rates are directly correlated to the buying power of a dollar. As interest rates increase, the amount a buyer can worry decreases.
The economy is strong in Utah and, for now, it looks like blue skies ahead for the housing industry. We hope to see more inventory added to the market but this will take time and the historically low interest rates we've become accustomed to are soon to be a thing of the past. Its time we adjust our mindset to the new normal and take advantage of what a strong market has to offer. If you aren't in the market yet, get in! Do whatever it takes to get in. Leverage the appreciation to help you create wealth that you can then use to move up in the market. If you currently own a home and are considering a change, make it. Call a member of our team for a complimentary consultation. We can design a pricing and marketing plan to fit your home and your goals.