A power shift is occurring in the housing market with more negotiating power landing on the buyer’s side. Home values moved 5.1 percent higher this past November compared to November 2017, according to a new report. However, appreciation growth is starting to curtail from its 5.4 percent annual gain in October. CoreLogic is predicting a 4.8 percent gain in home values by November 2019.
The National Association of REALTORS® also recently reported an uptick in inventory entering more markets as more homeowners put their homes up for sale. Buyers are having more choice, prompting some sellers to lower their asking prices due to the added competition, according to CoreLogic researchers.
Some buyers may still be skittish, however, due to affordability concerns. “The rise in mortgage rates has dampened buyer demand and slowed home-price growth,” says Frank Nothaft, CoreLogic’s chief economist. “Interest rates for new 30-year fixed-rate loans averaged 4.9 percent during November, the highest monthly average since February 2011. These higher rates and home prices have reduced buyer affordability.”
NAR has predicted home sales to top about 5.3 million for 2018, which would fall in line with sales performance from 2000. The strong economy may get more buyers purchasing in the new year.
“Given the 17 million more jobs now compared to the turn of the century, home sales are clearly under performing today,” says Lawrence Yun, NAR’s chief economist. “That also means there is a steady longer-term growth potential.”
It looks like this year could be a buyer's market for real estate as higher rates weigh on prices
- Home values in November were 5.1 percent higher compared with November 2017, according to a report released Wednesday. But that is down from the 5.4 percent annual gain seen in October.
- The slowdown in asking prices comes as sellers face a new reality of higher interest rates and affordability worries among potential buyers.
- Now projecting a smaller, 4.8 percent gain in November 2019.
Certainly, a strong economy helps homeowners feel confident about the value of their property, adds Frank Martell, president and CEO of CoreLogic. “If recent declines in the stock market shake consumer confidence in the national economy, we may see homeowners’ perception of home values change and a subsequent buyer’s market emerge in 2019.”
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