The data is showing a lot of buyer demand, prices are rising, interest rates are rising, home inventories are falling, days on market are falling with the average home sale going under contract in only 36 days. This is a fast market but is really nothing new as it has remained a seller’s market over the past few years.
The medium home price topped over $300,000 for the first time ever, according to Redfin’s chief economist Nela Richardson.
Starter homes are also harder to find, as most builders and investors are putting their money into higher margin properties, and that’s a challenge forcing more young buyers into the suburbs or into more affordable markets. Wages have also not risen at the same pace as housing prices, making it an even tougher challenge to find the perfect home.
The good news according to the latest US Census Bureau and US Department of Housing & Urban Development Residential Sales Report, the number of single-family building permits are up 7.4% over last year, with hopes of giving buyers more options as we head into 2019.
Today, with the tremendous lack of inventory, a seller can expect a great price on their home as buyers may need to outbid each other, or accept a quick sale at full price as buyers don’t want to rock the boat on negotiating. But in 2019 I would expect new construction to start taking a larger share of the market.
Bottom Line – If you are considering selling your house, you’ll want to beat this new competition to the market to ensure you get the most attention for your listing and gain the best price.
Before the end of 2017, people were looking at buy or sell a home in 2018, as HomeLight noticed a 25% increase in traffic on its website on December 26, 2017, with continuing high traffic hits through the new year.
Eager homebuyers have sen low inventory levels in many markets, pushing them to shop for homes earlier in the year to try to beat out the competition. Buyer's need to remain active and quick so as not to miss out on any available properties that are priced right.
The best time to sell homes has traditionally been between March and June. This time of year gets people out of the house during some warmer weather, notwithstanding the warmer climate regions which may see a longer time frame as they are not restricted by weather.
Zillow predicts home builders to construct more entry level style homes to meet the anticipated buyer demands later this year. If you wait too long to put your home on the market, you may find yourself competing with more newly built properties. We have not seen a lot of newly built properties since before the recession. While the last few years have proven beneficial for sellers, seeing many homes sell at their asking price or above with multiple offer bids, the seller's market will not last too much longer.
While mortgage rates aren’t expected to increase drastically in 2018, they are forecasted to increase overall. The Mortgage Bankers Association does predict that 30-year fixed-rate mortgages to rise to 5% by the end of 2019, and to 6% by the end of 2020. For both the buyer of your home, and for your own next home purchase, low interest rates can help make a transaction possible. According to NerdWallet, mortgage rate averages reached more than 4.4 percent in 2017.
The current low rates can serve as a jump start for many potential homebuyers to get moving sooner rather than later. But as interest rates continue to rise, less bidding wars are likely and welcome news for buyers, but not sellers.
The Tax Cuts and Jobs Act passed at the end of 2017 means a few home-related tax policy changes are implemented for the 2018 calendar year.
For instance, mortgage interest rates are deductible up to $750,000 in debt, and property taxes are only deductible up to $10,000. While these limits don’t affect all homeowners, people who live in towns like Long Beach Island and similar NJ shore towns are likely to feel the financial hit when they file taxes in 2019. The longer term outlook appears to have lower demand at the higher price points because the tax incentives just aren't there, besides the multi-family investment options.
Richard Melton expects housing markets in coastal states like New Jersey to be most impacted by the tax reform, and more specifically in the towns with highly ranked school districts because their property taxes tend to be higher. While homeowners with children in school may see the education factor weigh heavier than the financial burden, “You will likely see families and empty nesters move out of these high ranking school neighborhoods once there is no longer the need” he says.
To gain the maximum price on your home, the longer the new tax law sinks in, the more likely it is to change feelings toward pricier neighborhoods in coastal markets. You certainly shouldn’t have a hurried reaction to a policy change with an asset as significant as your house, but be aware of the anticipated housing market cycle.
The focus of the seller’s market this year is not taking the tight inventory for granted. Buyers still expect effort from sellers in preparing a property for sale. Some may be willing to overlook a dated kitchen, maybe some deferred maintenance or lack of curb appeal, but any of these can still kill a deal. Sellers need to remain cognizant and take the process seriously to maximize buyer interest.
Zillow is a leading real estate marketplace company, and their 2018 predictions include an expectation for most homeowners to work on renovations and repairs this year rather than to sell their property. While it is unlikely to have a 100% return when it comes time to recoup your renovation expenses, remodeling does become an investment and increase the market value by spending to make your home look amazing.
To receive your instant analysis on your own personal property, or a property that you may be interested in purchase, visit Melton & Partners today and click on the Home Valuation image. All you will need is your property address, and sign up using your email address and mobile phone number. The website is mobile optimized, has interactive maps of all MLS properties with large pictures, and has an overall great user experience.