National Housing Market in Correction, not Slowdown

As the calendar turns to July, we have officially completed the first half of 2019.  Coming into 2019, everyone worried about how the housing market would fare considering the slowdown that occurred in late 2018.  At that point, the Federal Reserve dropped hints of more increases for 2019 having had made a couple of tax hikes already.  Analysts were predicting mortgage rates to be 5.5% or above.  Rising mortgage rates coupled with a softening market in late 2018 created unknowns for 2019.

At the beginning of year, we saw a rise in inventory but sales declining – the same rhetoric we’ve seen during the last half of 2018.  However, the impending Fed tax hike never did come.  The looming mortgage rates of 5% or more has died, and rates have been falling steadily.  While sales decline, home prices seem to fall – when they are actually correcting.  In the past two years, home prices increased dramatically throughout the nation.  Now, they are increasing but at a more moderate rate.  In some markets, like Seattle for example, the correcting seems more aggressive since our market had accelerated faster than most.  Seattle’s year over year growth had been 10% or more.  This year?  It remained the same. 

However, lower prices and lower mortgage rates don’t mean more buyers.  Confidence in buying has slowed.  Although unemployment rates have been low and more jobs are created, the trade war has dampened the stability of some homebuyers.  Overall, the market seems to have stabilized a bit throughout the nation.  Each market has its own nuances, including cost of living and taxes.  Therefore, we aren’t seeing the slowdown as previously predicted but the market hasn’t moved back into the frenzy we saw a couple years back. 

What will the rest of the year look like?  It’s hard to capture an accurate prediction (we saw how well that worked last year) but we can analyze what we do know.  There is more inventory on the market than we’ve seen in several years.  Prices are steadily increasing and with lower mortgage rates, we are seeing more refinancing.  Tapping into the home equity, homeowners can use that money on their home to increase the value or spending it and furthering the economy.  The job market is steady with the nation’s lowest unemployment rates.  We can continue to see a thriving real estate market, hopefully one with less fervor than what we saw in Seattle two years ago.