That House Will Probably Cost More The Longer You Wait
Today’s potential home buyers have many questions about local real estate markets and how it relates to the purchase of a new home. The one I hear the most is:
‘Does it make sense to buy a house in now, or would it be better to wait until next year?’
Click on the video above to find out more,
Well, there are some things we just can’t predict with certainty, and that includes future housing costs….however,
Houses Are INCREASING in Value and Are Getting More Expensive
As usual, it’s a story of supply and demand. There is a high level of demand for housing in cities across the country, but there’s not enough inventory to meet it. As a result, home buyers in who delay their purchases until 2019 will likely encounter higher housing costs.
According to Zillow, the real estate information company, the median home value for Arizona increased to over $233,000 – a year-over-year increase of 6.7%. In California, the median home value is over $465,000 – an increase of 8.8%. Looking forward, the company’s economists expect the median to rise by another nearly 5% over the next 12 months. This particular forecast projects into the first quarter of 2019.
Other forecasters have echoed this sentiment. There appears to be broad consensus that home values across the country will likely continue to rise over the coming months.
The Supply and Demand for Housing
It is the supply and demand imbalance that’s the primary factor in influencing home prices. So it’s vitally important for home buyers to understand these market conditions.
Most real estate markets, including California and Arizona are experiencing a supply shortage. Inventory is falling short of demand, and that puts upward pressure on home values.
Economists and housing analysts say that a balanced real estate market has somewhere around 5 to 6 months worth of supply. In both California and Arizona today, that figure is in the 2.5 to 3 month range. Clearly, these markets are much tighter than normal, from an inventory standpoint. This is true for other parts of the nation as well, where inventory levels are in the 4-month range.
There has been a slow increase in interest rates since September of 2017 – and a quicker jump in the last few months. Bond markets haven’t seen pressures like this in over 4 years – and things are trending higher.
This is a general reflection better economic data, rising energy prices and the passage of sweeping tax cuts. Many think could provide a further boost to the economy – giving consumers more money at their disposal.
If positive labor and economic news keep pouring out (as most analysts believe things will continue to improve), then the prospect of inflation will put pressure on bonds and interest rates.
So, let’s take a look at our original question: Does it make sense to buy a home in 2018, or is it better to wait until 2019?
Current trends suggest that home buyers who delay their purchases until later this year or next will most likely encounter higher housing costs. All of these trends and forecasts make a good case for buying a home sooner rather than later. Please reach out to me for more, as it would be my privilege to help!