January 08, 2019
Should Americans be Worried About the Recent Slowdown in House Sales?
Things were hot for a minute there. Home sales were rising over the past couple years, as people looked to get into logistically desirable housing markets—and listing prices were rising right along with them. Then, it seems, we turned a corner. Things have begun to slow down. The listing prices in some major markets became a bit too ambitious—causing potential buyers to wonder: “Could this be a repeat of the 2006 market situation? Might I soon find myself stuck in a home for which I owe much more than it is worth?” And potential sellers thought: “Yes, I might net a good sale price on this place, but will I be able to afford to move up?” Buyers’ fatigue has begun to set in, in other words, and prices have begun to rise more slowly.
The housing market is like a living thing, in a sense. It has its periods of strong growth, and its moments of strategic retreat. From time to time it grows flush with such vitality as to seem almost mad in its bullishness—which amounts to burning the candle at both ends. Then, just as irregularly, and somewhat unpredictably, it finds itself sick.
Now, among other forces at work, mortgage rates are rising as the Fed increases the rates at which it lends to banks. This automatically reduces the pool of potential buyers, as it causes a rise in the cost of monthly payments, which may put that dream home just out of a buyer’s reach—meaning a longer period of saving money for down payment before they can make the plunge.
Meanwhile, the amount of time people are staying in their homes, on average, has risen over the years since 2000, from around 6 years then to 10 years now. Of course, this is not perfectly uniform. In coastal states—including Rhode Island, Florida, and (most especially) Massachusetts, all three of the markets in which we at Topouzis & Associates, P.C., perform our services—homeowners are much more likely now to stay put in their homes than are homeowners in the more central regions of the country. This overall trend in length of habitation changed during—you guessed it—the “Great Recession.” There’s no question that particular sickness in the market has left its mark on the psyche of America, and we will be experiencing its echoes for years to come.
But even a once-sick animal can come back to roaring life—so long as it avoids doing the things that made it sick in the first place.
The good news this time around is that—despite homeowners staying in place longer than they used to—the fundamental problems we saw in the real estate market that led most directly to the “Great Recession” (namely a surplus of subprime mortgages) are not in the offing. While lenders are not as unlikely to offer loans as they were during the crisis, neither have they strayed anywhere nearly as deep into the realm of loan-liberality as they wandered in the lead-up to the crisis. Indeed, they are not likely to lighten underwriting standards to that extent again, at least for a generation, and probably not during our lifetimes.
When a buyer does decide it’s time to make that move into a new property, whether in Cranston, Rhode Island; Boca Raton, Florida; or Cambridge, Massachusetts, we at Topouzis & Associates, P.C. stand ready to provide thorough title searches, title curative services, and title insurance policies that back those services—the latter of which are designed to provide peace of mind in the face of potential hidden issues with title that somehow manage to creep out of the past. Whether you’re a lender, realtor, or prospective home buyer, feel free to contact us.