March 8, 2019 rummy 0Comment

We are definitely headed to a balanced market this year. As things start to unfold, we are beginning to realize that last year’s worries are nothing more than speculations. Price hikes are starting to soften as more inventory is introduced, this is good news to sellers and buyers alike.

The previous housing market was fueled by an artificial demand created by mortgage standards that were far too lenient. When this demand was shut off, a flood of inventory came to market. This included heavily discounted distressed properties (foreclosures and short sales).

Today’s market is totally different. Mortgage standards are tighter than they were prior to the last boom and bust. There is no fear that a rush of foreclosures will come to market. The Mortgage Bankers’ Association just announced that foreclosures are lower today than at any time since 1996.

Case Shiller looks at the percentage of appreciation as compared to the same month the year prior. Here is a graph of their findings over the last ten months:

As we can see, home price appreciation is softening as more inventory comes to market. This shows that real estate prices are not crashing, but merely returning toward historic appreciation numbers of 3.6% annually.

Home prices are leveling off. Long term, that is a good thing for the housing market.

Reference: http://bit.ly/2H8LfsU

 

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