Has the heat of Summer and the homebuying market got you thinking about waiting until Fall to buy a house? Before you jump into the real estate market, you need to know what to expect. Luckily, we have your back on that one.
A snapshot of the homebuying market going into Fall 2018
What are some seasonal trends about buying in Fall that buyers should anticipate? What are mortgage rates like right now? Are home prices trending upward or downward overall? Keep reading to find out the answers to these questions and more:
1. Mortgage rates are rising and show no signs of stopping
If you’ve heard anything about the mortgage industry recently, it’s that mortgage interest rates are up. Unfortunately for would-be homebuyers, rates don’t seem to be slowing down anytime soon. As of the first week of August 2018, the average rate for a 30-year fixed rate mortgage is up to 4.75% for a 30-year, fixed rate mortgage. That’s up from 4.71% the previous week.
This jump in rates can be attributed to multiple factors, not least of which the treasury yield -- a measure of return on investment. This has been slowly on the rise through 2018 and has floated above 3% for all of August. Another factor could be inflation, which currently sits slightly above the ideal 2% benchmark.
Both these factors are signs we are in a healthy, growing economy, and mortgage interest rates tend to follow that trend.
We’ll likely continue to see them move upward throughout the year, meaning that the best move for would-be buyers is to try to lock in lower interest rates while they’re still available.
2. Home prices are also up
Additionally, housing prices are also on the rise. As of July 2018, the median home price across the United States is $217,300. While that number may seem reasonable to some, it’s an 8% increase since the same time last year. Within the next year, the median home price is expected to rise again, this time jumping by 6%.
Again, the rise in prices could be due, in part, to inflation. However, the more likely cause is high demand. People are staying in their homes for longer than they had in the past, and low inventory is leading to bidding wars. More bidding wars drive up prices -- and higher home values.
So, what does that mean for buyers who are looking to buy a home in this market? Be prepared to go into this market with your highest and best offer. This is not the time to try and float a low-ball offer. If you’re serious about the home, go in strong.
3. But you might have less competition
The one boon in all this is that, while prices and interest rates will continue to grow, for those who can afford to buy, competition may be getting less stiff. Since the start of Spring, we’ve been hearing how buyer demand has far outpaced inventory, creating an aggressively seller-oriented market.
However, it seems like that demand might be starting to wane a little.
In the first week of August, applications to buy a home fell for the third straight week in a month, meaning that fewer people are trying to get pre-approvals. Again, this could be due to a variety of factors, but it may be because people are heeding warnings about the changing housing market.
The news of rising interest rates and prices may be more than enough to scare off those on the fence about being able to afford to buy a home.
That, combined with the normal drop in interest that happens in the Fall, means that buyers who feel confident in their ability to buy may see the spoils. Fewer buyers means less competition over low inventory and the potential for flexibility on price.