Homebuyers and sellers can maximize their savings and find the best deals in the housing market by understanding it as if they were top real estate agents.
Agents can offer plenty to buyers and sellers, such as knowledge of the closing process, negotiating skills and networks of helpful people and services. However, a more thorough understanding of the housing market itself and what affects it can help potential buyers as they make the decision to invest in real estate, determine when and where to start looking, and decide what represents a good deal and more. By doing a little research before diving into the market, this sort of knowledge can be a huge benefit to the homebuying and selling process. Here are a few of the factors that influence real estate:
- Mortgage interest rates
The current mortgage interest rate at any given time is one of the more significant elements of the housing market’s up or down turns. The mortgage rate ticks up the slightest, and mortgage applications tend to tumble. It trickles down again, and applications shoot right back up. This is particularly important now, because the Federal Reserve Bank finally raised its benchmark interest rate, which serves as a standard for many other interest rates, up slightly. The expectation was that this change would drive mortgage rates upward to the mid-4 percent to 5 percent range. Thus far that hasn’t quite happened, but it is reasonable to expect mortgage rates to remain steadily above 4 percent by the end of the year. However, it should be noted that historically, 4-5% isn’t a particularly obstructive rate.
- Housing inventory
The rule of supply and demand is something taught in classrooms across the country, and when it comes to the housing market it applies just the same as anywhere else – that is, usually it does. Lately housing inventory has been unusually tight and has driven home prices up. A house may seem like a rare commodity on the open market these days. Luckily, though, the state of housing supply in the U.S. seems ready to turn a corner. The most recent data from the Department of Commerce revealed that housing starts, or new construction, rose 5.2 percent in February. With home building heading for an upswing, this spring could see prices level out somewhat.
- Demographics of buyers
The housing market has come a long way from the crash nearly 10 years ago, but it isn’t completely out of the woods yet. Most experts are waiting on millennials to swoop in and spark a substantial surge in buying. Thus far, that hasn’t happened, but that’s not to say millennials aren’t interested. Younger homebuyers are increasingly switching their focus from urban areas to the suburbs, according to the National Association of Realtors. As this trend continues, the demand for homes should rise substantially, which brings us back to the supply and demand rule. As more millennials enter the market, it should grow healthier.
As these trends continue to coalesce, the coming months may become quite an attractive time for homebuyers, and as a result, sellers. Anyone interested in a change of scenery should follow these trends to understand exactly where the market is at, and where it is headed.
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