By Anthony O. Kellum
Home price growth slowed in the second half of 2018, with fewer buyers entering the market, at least partially due to rising interest rates issued by the Federal Reserve. In 2019, consumers shouldn’t expect homebuyers to flood the market again and drive prices through the roof, but it’s also unlikely to be a crisis for home sellers and real estate investors.
If you purchased your house in the last year or two, still love it and don’t want to part with it, go ahead and wait another three to five years before revisiting the thought of selling. But if you’re weighing your options to sell, considering selling this year or maybe the year after, don’t play the waiting game.
New buyers are still entering the market. As interest rates rise, some buyers will hesitate to make an offer on a home or apply for a mortgage, so be ready to see occasional drops in buyer activity. And if your house is at the higher end of the price range in your market, you should expect less buyer interest than before. Note the combination of rising mortgage rates and home prices exceeding buyers’ budgets are what has caused the slowing of homebuyer activity in recent months.
But with available housing inventory remaining low in Metro Detroit, even with rising interest rates, buyers who are ready to make a purchase will still shop for homes. The biggest wave of new homebuyers will be among millennials, who are mostly first-time buyers. In a Trulia Poll survey of 2,000 more than one-fifth of Americans between ages 18 and 34 said they plan to buy a home within the next 12 months. Already, millennials make up the largest share of homebuyers at 36 percent, according to the National Association of Realtors.
The bottom line: While houses may sit on the market for a few more days on average compared with 2017 when the market was hot, buyers remain active and it’s still very possible to profit from your home sale.
Interest rates are still low-ish. Mortgage interest rates are rising, reaching 4.87 percent in February for a 30-year, fixed-rate mortgage, per data from Freddie Mac. While rates are at their highest level since February 2011, they remain much lower than the historic high of more than 18 percent in 1981.
It’s important to keep in mind that while mortgage rates tend to mirror the Fed’s interest rate activity, mortgage rates are based on the market in that moment, your financial status and the property you’re looking to purchase.
A sudden leap in mortgage interest rates is unlikely in 2019, though Pataky notes that you should be ready to see rates continue to climb. I expect over the next 12 months that mortgage rates will continue to drift higher.
If you’re looking to get the lowest interest rate possible on your next house, try to make a deal sooner rather than later.
Anthony O. Kellum, Speaker, Author and TV Host. NMLS # 1267030 President of Kellum Capital Group and Kellum Mortgage. Powered by Local Lending Group. NMLS # 1567678. He can be reached at 248-599-1624 or connect via Facebook at www.Facebook.com/propertyispower. Or Anthony@kellummortgage.com Join the mission to save the American Dream of Homeownership. Property is Power!