After decades of involvement, in financial planning, and more than a decade, as a Real Estate Licensed Salesperson, in the State of New York, periodically, I find it valuable, to take a closer look, at the current trends, future possibilities (and factors which might have an impact), and how, to carefully, be in a position, to offer the best possible perspectives, etc. Let’s begin by clearing stating, there is no such thing, as a Crystal Ball, when it comes to real estate, and, for that matter, any financial issue. At the same time, however, possessing an historical perspective, understanding how certain issues, etc, might impact the market, etc, are significant, relevant issues. With that in mind, this article will attempt to briefly review, examine, consider, and discuss, some factors, which might affect the real estate market.
1. Factors affecting interest rates: When interest rates, go up, mortgage rates follow. The higher this rate, the more it costs, on a monthly basis, to own a home. Remember, the vast majority of homeowners, take advantage of a mortgage loan, in order to purchase their house. A small increase may raise, the monthly expense, and, so, some individuals, might not qualify, for the loan, because of this. In addition, many people consider their monthly budgets, and personal comfort zone, so any significant increase, may reduce the number of qualified, potential buyers. The overall impact of this, may be, transforming a sellers market, to a buyers, or neutral market. This often creates price adjustments, and, wise consumers, do, what they can, to beware, and prepare. What will 2019 witness, in terms of interest rates? No one knows for certain, but, the best guess, would be a small increase, on a gradual basis, unless, some major factor happens.
2. Confidence: When people are more confident in the future, housing generally benefits. We often see this, in stock market swings, but, it also happens in real estate. With a low employment rate, we have witnessed good markets, the past couple of years, but, how might this partial government shutdown, factor in, and will, the market remain strong? We must closely examine the possible factors involved, which include: political uncertainty; world dangers; economic upticks/ downturns, etc. Most factors seem to indicate both, positive and negative factors, so proceed wisely.
3. Competition: Up until the fourth quarter of 2018, the previous couple of years, witnessed a Sellers Market, where many houses sold quickly, and above listing price. The fourth quarter showed some slight cooling, and a little more normalcy. However, we have also seen a slight uptick, in the number of houses, listed, and, thus, a somewhat increased inventory.
4. Pricing: While uncertain, most factors point to, more stable pricing, instead of the fast increase we have witnessed, the past few years. Most experts are calling for a slight increase, year – over – year, but, beware, many factors might come into play.
5. Inflation: If we have a higher rate of inflation, home prices will rise. Most are calling for only moderate inflation.
Don’t ignore other factors, such as uncertain political issues, world crises, climate, etc, because they affect housing and the market. Beware, and prepare, and proceed, with your eyes, wide – open.