November 01, 2018
Listing Prices Begin to Fall as Buyers’ Fatigue Sets In, But Single-Family Construction Permits are Down
It seems as though the market’s price-rise may be cooling off at last. In July and August, the prices at which people bought homes was forced down from its recent peak. (Still—lest we be misunderstood—the demand for homes is still relatively high, and still increasing. It’s just that the rate of that increase has diminished.)
There has been a general shortage of housing inventory for the past three years, which is what has led to the seller’s market we have seen, with its high prices to buy. For some time now multiple offers have been made for the same properties in most markets, and the time that houses have been at market has been relatively low. Meanwhile both the stock market and levels of employment have been on the rise.
Many of us saw this decline in demand coming. Mortgage rates, too, have been on the rise, affecting affordability, and the very fact of a seller’s market can, after a time, cause prospective buyers to feel a bit gun shy. This is known as “buyer’s fatigue,” and it is a real force to reckon with—especially given that the “Great Recession” is still a recent memory for many, and its lessons may be rather crudely understood.
What’s perplexing is that this news comes at the same time as the recent Zillow research showing that new residential construction permits (for detached single-family dwellings) were down in August at a rate of 5.7% from their rate in July, and down 5.5% from August 2017. Like the Zillow researchers, we find this somewhat odd, given that the underlying fundamentals of the economy appear to be strong, the level of homeownership relatively low, and the demand for homes correspondingly high—and generally this sort of picture is assumed to mean growth in permits for home construction, not decline.
Meanwhile, multifamily property construction is occurring at a higher rate than one would expect—its highest since the 1970s—which is strange, given the low, flat and falling rate of rent throughout the nation.
It remains to be seen where this trend will lead, but whatever the case, Topouzis & Associates, P.C., will be here—whether you’re in Peabody, Massachusetts; Fort Lauderdale, Florida; or Providence, Rhode Island—to aid you in your closings. We act as a bulwark against problems of the past, performing title searches and ensuring clear title to property—and we back our services with offerings of title insurance (click here), in case someone along the line of ownership did something that will weaken a property’s title at some point in the future.