After years of recovery, many housing markets around the country are back to pre-recession levels. However, there’s one thing that’s different than before. Due to the downturn in construction, housing inventory is low in active markets.
Even with fewer buyers, it’s a sellers market in cities like San Diego, Denver and Nashville. When things are this hot and moving fast it can be good news for people who are saving for retirement or selling soon.
What the Current Market Conditions Mean for Homeowners
The real estate market moves in cycles and right now it’s on the upswing in many areas. Of course, real estate is local, but national trends point to the general way things are moving. Be familiar the current market conditions can help homeowners as much as buyers.
Here are a few things homeowners should know about the current national market conditions.
Easier Equity Access
High demand and lack of inventory are two things that tend to boost appreciation. This is good news for any homeowner, especially retirees and investors that want to tap into their equity. Getting a reverse mortgage or home equity loan could be easier now that prices are on the rise, since they are largely based on the value of the property.
In fact, increasing appreciation could help the real estate market in general. Many people that would like to buy a new home can’t because they still haven’t built up enough equity to sell their current house that lost value during the recession. Once those homeowners are ready to sell in a few more years, first-time homebuyers may have an easier time finding entry-level homes.
Tiny Homes Are in High Demand
If you own a home that’s 1,000 square feet or less, you’re in a better position today than in past years. In an effort to find affordable housing many buyers are choosing to sacrifice square footage and cities are using tiny houses for affordable home programs. It’s helped make tiny homes a hot commodity. All of the real estate shows about tiny living are also helping increase demand.
Two key buyer groups are interested in tiny homes: First-time Millennial homebuyers and Baby Boomer empty nesters. In some markets it’s common to see Baby Boomers sell their house in order to downsize to a tiny home.
Rising Interest Rates Are Fueling Buyer Interest
If you’ve been paying attention to the real estate market then you probably know that the Fed is likely to increase interest rates again in the near future. This is prompting many buyers to pull the trigger on getting a home while the interest rates are lower. It’s also influencing homeowners that want to upgrade or use financial tools like a second mortgage or reverse mortgage.
Value is a Top Priority
Many modern day buyers learned lessons from the Great Recession even if they weren’t caught up in a foreclosure. Buyers are much more concerned about value and sticking to a budget rather than maxing out an exorbitant loan amount. Homeowners that price their home well are in the position to get an offer quickly and possibly a multiple offer situation.
Bubble Fears Are Largely Unfounded
Some homeowners think the recent surge in home prices is a sign that market corrections aren’t far behind. It’s understandable given that less than a decade ago many homeowners saw their home values plummet after a meteoric rise. But experts say that prices are more likely to keep increasing than backslide.
The increase in interest rates will help suppress the appreciation, but slow growth is still expected. In cities where the local economy is booming, like Austin and Seattle, appreciate will probably remain above the national average of 4%.
A Long Way From Buyers Markets
Homeowners that aren’t ready to list just yet can rest easy that the market isn’t likely to turn any time soon. At the end of 2016 the national housing supply was 3.6 months. A balanced market has a housing inventory of 6-7 months. It will take some time to build the inventory back up in many markets, especially at the entry-level and trade-up housing levels.