Oftentimes local real estate is characterized by home buyers versus home sellers: Which side has more leverage? Who’s affected the most by current trends? Who will have the upper hand if things change? Is it a buyer’s or seller’s market?
Both buyers and sellers, for different reasons, have been commiserating together whether the tide may be shifting toward a “buyer’s market” in very select regions. Both have faced unique challenges and opportunities in the real estate market. That’s poised to change.
Local home prices were too steep to stomach for many would-be buyers, some of them first-timers, yet lenders were hopeful that the offset of low mortgage rates would lure them. Many brokers tried the message that “rates would be increasing soon”, but they didn’t budge. Many of these folks already refinanced at the lowest-of-low rates and questioned why pay for a new, higher-rate mortgage?
A much-awaited inflection point may be in store for 2019, although it’s a bit early to know for sure. Nationally, the latest data show the number of homes for sale is slowly rising, and even more so in certain local markets. Separately, monthly sales activity has slightly downshifted. This can be good for buyers if housing inventory continues outpacing sales demand in the coming months. More options on the market could pressure sellers to get more competitive.
Sellers, though, just might be celebrating too. With mortgage rates slowly falling since late 2018—and the possibility they could drop further this year—the trade-off for “giving up” that low locked-in rate won’t hurt as much for homeowners stuck in limbo regarding whether to put their house on the market. Also, year-over-year price growth has been petering out in many regions (only 1 – 2 percent) or flatlined in others. Whether they purchased in 2012, 2015 or 2017, many homeowners hold enough equity. “NOW” may finally be the time to call the shots, talk to their agent, and put a sign in the yard.
Going forward, will it become both a buyer’s and seller’s market? In economics, this textbook concept is called “market equilibrium,” a fancy phrase for the real estate environment that long-time realtors were used to before monetary policymakers started experimenting with ultra-low interest rates during and after the Great Recession. That’s another conversation for another day.
What’s more important is: There’s already talk of a buyer’s market materializing during the past few months in a dozen metropolitan regions across the country. It could be on the horizon for other areas too. Buyers and sellers should keep an eye on this fledgling trend. With greater awareness comes knowledge—and eventually the agility to make the right decisions at the right time.