What to Expect When You're Expecting...
...to buy a home in 2018. But seriously, what should we expect? 2017 is quickly coming to a close, the Fed just recently upped short-term interest rates, and southerners are nesting as temps drop.
It may come as a surprise, but winter is a great time to BUY.
--- Common sense tells us that moving in the winter isn't fun and so it follows that if someone is selling it's likely because they have to sell. You, meanwhile, don't have to buy (you can always rent or do a short-term rental), and that creates leverage. This is key in a sellers market. anything that helps you as the buyer is a win.
--- Take advantage of a built-in discount. The chart below shows the asking price (the listing price), versus the average sales price of a home. It might not seem like the difference between the highest point and the lowest point is much but small changes applied to a home worth a few hundred thousand dollars adds up. A home sold in December or January with that 2-3% discount can save you thousands of dollars. Examine that in comparison to May 2017, when 99.4% of homes sold for asking price, and suddenly December and January look even more enticing!
---2018 will see continued price growth, and the short-term interest rates being raised is one signal of this. The Fed uses short-term interest rates to help cull inflation and to keep economic growth stabilized. Think of it as a gardener pruning a rose bush so that it remains in good health and produces plenty of beautiful roses. The most recent rise in short-term rates is a good sign and we've already seen long-term mortgages rates stay low after a recent increase in rates this week. This long term stability is one of many indicators of the forecasted continued growth.
---If interest rates were to rise, all hope is not lost. You may be surprised to learn that current interest rates for a 30 year fixed mortgages are at a historic low. Don't believe me? Take a look at the chart below to see 30-year fixed mortgage interest rates as collected/stored by the St. Louis Fed. Experts believe that interest rates for this kind of mortgage could rise significantly and there would be little impact on the housing market as buyers would have the option to use adjustable rate mortgages (ARM's). This works particularly well for the current market, because few people stay in their homes for 30 years. There is no current data to share exactly how long homeowners own their home for but, the last data set (ending in 2007) had roughly 22% of owners living in their homes for 10 years or less. In other words, a 30-year fixed mortgage isn't the ONLY option if you only plan to live in home for 10 years or less. If rates were to increase, you still have options.
---If 2018 has the same characteristics as 2017 we will see steady price growth. A growing construction industry (particularly in Midlothian), a continued 'seller's market', and very busy spring and summer season drive this growth.
Is there anything specific you're looking at when considering buying this next year? Let's talk.
Email: Bryson@buyinrva.com Phone: 804-874-4749