Home Sales Are Down–Here’s What You Should Know
According to The National Association of Realtors, the housing market is slowing down in 2018.
August marks the fifth month in a row that the Pending Homes sales index of the NAR showed a trend of declining home sales on a yearly basis.
But, what’s causing this decline?
In this article, we’ll discuss a couple of the contributing factors to this downward trend and what you should be doing about it.
Let’s dive in!
One of the biggest factors contributing to this ongoing decline of the housing market is rising rates.
Increased rates make it more expensive to own homes. As a result, first-time home buyers are met with an uphill battle when trying to enter the market. Most times, it’s nearly impossible for them to invest in a starter property because the price of owning a home is just too high.
What’s worse is that these rates also affect move-up buyers.
Buyers are now faced with high rates on their new mortgages as compared to those they received over half a decade ago. For even a small change in rates, like 2.25 to 3.50, can have major financial implications for many move-up buyers.
Quickly Appreciating Home Prices
Another factor slowing the market down is the difference between home prices and income growth.
In most markets across the country, home prices have appreciated at much higher rates and more quickly than income growth since the recession ended.
After the recession, housing prices rose at least 3 times as much as household incomes did. Of course, specific markets experienced varying growth rates, but this trend is observed when looking at the country as a whole.
Because of this trend, average-priced homes quickly became unattainable for first-time home buyers or even move-up buyers. Their average household income simply could not keep up with the rapidly accelerated growth rate of housing prices.
Looking for help navigating the Real Estate market? Contact us today so we can help you figure out the best strategy and options for your specific Real Estate needs.
For more on this subject read our recent blog, “Summer Real Estate Trends.”
Thinking of buying or selling a home in the La Jolla area? As consistent top producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Our team of local experts will ensure that you have a successful real estate transaction. Call us today at (858) 361-5561 or email us anytime by clicking here.