July 10, 2019
Affordability of Homebuying This Spring
Recently The National Association of Realtors’ Chief Economist Lawrence Yun presented his outlook for the real estate economy going into Spring 2019.
He pointed out that, while home prices reached record highs in early 2018 (continuing their steady increase from 2010), with the result that homeowner wealth grew alongside (to the tune of $1 trillion), the latter portion of the year saw the rise in home prices cooling—and even the median home sales price dropping in some major metropolitan areas—due to a falloff in buyer interest (which many referred to as “buyers’ fatigue”). Home sales went through a 10 percent year-over-year plunge in December. Naturally, those of us in the real estate industry were looking on with great interest to see how things would go as we entered Spring—also known as “home-buying season.”
Luckily, early indications are that the season is going well, from a buyer’s perspective. This is the result of a confluence of factors.
For one thing, consumer sentiment about home buying has begun an about-face. While only 34 percent of consumers polled considered it a good time to buy in the third financial quarter of 2018, that share has since risen. According to Yun, the number of openings of lockboxes by realtors on behalf of prospective buyers has been on an upward trajectory.
Another indicator of a solid Spring season: more people are applying for mortgages, and the number of contracts signed to buy increased by 4.6 percent in January over December’s rate.
So where homes were being considered unaffordable for a brief time due to an overheated pricing market because of low inventory, as well as the rise in interest rates and a rise in wages that was anemic by comparison, the decision by the Fed to hold rates steady caused the average mortgage rate to decrease again, and the recent wage gain rate has been the highest in a decade—making it the first time in quite a while that the growth of consumer income may outpace the rate of growth in home prices. Affordability is here at last.
So it’s the right time to buy a home. At Topouzis & Associates, P.C., we perform title searches and remedy problems with title in Massachusetts, Rhode Island, and Florida—with the aim of decreasing conflicts over title after closing. We back these services with title insurance for both lenders and owners. Contact us if you’re considering purchasing a new property, whether for yourself or as an investment, so we can help ensure that you achieve true ownership without having to deal with unforeseen hassles arising from problems created by someone else in the past.