With the year coming to a close, many prospective home buyers and sellers are asking what the landscape will be in our local housing market.
Say good-bye to multiple offers, and hello to a much more balanced market! We are running into an interesting conundrum in that prices have peaked. With housing gains at 20% since the crash, and incomes that have not increased enough since 2011, it is safe to say we have reached the top (for now). Consider this a pause.
Inventory will remain low, and interest rates are very likely to increase, which makes affordability even less. If interest rates reach 5%, many homeowners are likely to renovate their homes rather than move. While we will see less multiple offers, sellers will still do very well because inventory will remain low.
Lenders are still conservative and require hefty down payments from buyers, and low debt to income ratios, which will not allow for anymore sharp price increases. Many first time buyers (who also make up a huge portion of our market) do not have the upfront cash that banks require in order to borrow money.
But wait... If incomes do increase over the next two years (which is still possible), then you can expect another boom in our housing market. Also, we could see a huge amount of Millennial buyers enter the market if lenders loosen up their guidelines. In the meantime, we are heading into a healthy and sustainable real estate market!
Happy New Year, and Happy House Hunting in 2015!
