Even though the housing market continues to see rising home prices throughout the United States as supply is shrinking, the demand for buying a new home or buying a home for sale has tapered off slightly because of the rising interest rates. The good news is that the economy has finally rebounded from the devastating effects of the Recession, but that means that in order to stem inflation and keep the economy in check, the Fed had to raise interest rates. Because of the this, buyers are being more careful and thrifty with their money and the amount of money they can spend on their monthly mortgage note which translates for sellers that even though it’s very much a seller’s market, sellers are having to make concessions in order to close the deal with home buyers.
In June, 2018, sellers cut prices on approximately 14% of all home sales in order to close the sale. At the end of 2016, the lowest price cut by sellers was 11.7%, so price cuts are on the rise as home prices, having been on the rise, might be reaching their ceiling.
Simple supply and demand have been factors in the cost of homes and the affordability of homes. Rising interest rates have also affected affordability with the ability of buyers to make a larger monthly note. The supply of houses for sale was affected by two huge factors – the so-called “millenial” generation coming of age to be able to buy a home for sale and the disappearance of homes through the foreclosure process that were then turned into single-family rentals, removing them as purchasable homes on the market.
Also, builders recovering from the Recession were cautious as to how many construction loans they took on, having been burned by the Recession and standing inventory. The slow start of builders to start to get “spec houses” out for sale, sticking to the guaranteed deal of having contracts to build a new home or build a completely custom home also contributed to the lack of supply on the market.
Even though the slowdown of the housing market might seem alarming to some people, economists predict rightly that real estate is finally returning to a normal market. Nationwide, there is not a reflection of a total overall slowdown though. Different markets with different factors including job growth and corporate buy-in’s give different locations encouraging statistics. One such market is Austin, Texas, which is enjoying an incredible housing market because of an influx of technology jobs.
“We saw intense bidding on homes over the past few years, but that is calming down with more inventory in the area,” said B Barnett, a real estate agent at Reilly Realtors in Austin. “Our inventory of homes is going up with new construction, and it is helping transfer power back to the buyer.”
Economic forecasts for 2019 show a slowdown of the GDP as the effects of the tax cuts and stock market surge level off. If you are interested in skipping the challenge of supply and demand in your market and would like to just build your own new home in St. Tammany Parish, Louisiana, Contact Ron Lee Homes, a custom home builder, directly at 985-626-7619 or email Info@RonLeeHomes.com.