After experiencing a period of out of control growth, the US real estate market may finally be hitting a wall. April 2019 saw an overall decline in construction, including a 1% decrease in residential building, but that’s not the only shift in today’s real estate market. Across the board, housing prices are increasing at the slowest rate in a 6.5 year period, even falling in some places. For those trying to sell right now, then, the challenge is finding ways to leverage the best traits of a given property without taking too much of a financial hit.
A Buyer’s Market
While new construction may have hit a slowdown and prices are stagnating, it’s undeniable that right now is a buyer’s market. Of particular benefit to buyers is the current mortgage rate, which at just over 4% is at a 16-month low, down a full 18% since November. It’s a perfect time for young buyers to purchase their first homes, but also a good time for investors to acquire additional properties.
The Seller Perspective
If it’s a good time for buyers to make their entry into the market, sellers are obviously at a disadvantage. Their task, then, is to try to leverage the best elements of their property to maximize its value. What these elements are will vary by region, however.
According to the property management experts at Green Residential, some of the best traits Houston sellers can leverage to get a better price for their home include cultural opportunities, the local job market, and increasing school choice. Similar traits are likely to apply to other major urban areas, while suburban sellers may use relative home and property sizes as well as the safety of the community to appeal to buyers.
In addition to attempting to leverage the best elements of a given property to maximize value, it’s important for owners to recognize why home values are stagnating or even declining. According to Skylar Olsen, director or economic research at Zillow, “Home values grew incredibly quickly. You shook some people,” notes Olsen, and that led to Houston, as well as Dallas and Denver, becoming significantly overpriced. They needed to fall a few degrees to align with the market.
Those in the real estate industry should also be aware of some of the mixed messages shaping the market right now. Just as new construction started to come to a halt, President Trump addressed the National Association of Realtors, saying that “There’s truly never been a better time, in my opinion, to build and break ground in America.” Construction professionals clearly disagree, and real estate investors seem to be with them.
Too Long To Sell
Though homes are more affordable and mortgage rates are down, the final verdict on today’s real estate market is that homes are taking too long to sell, leaving flippers in a lurch, and trapping owners in properties they hope to leave behind. There are also too many large homes on the market, while there’s a shortage of affordable housing options across the country. It should be easy for buyers to make a move, but that’s really only true within a narrow economic range. Still, neither buyers or sellers should dismay.
Property trends are always shifting and even the slightest change in tax policy or mortgage rates can send housing prices into flux. The good news is that this isn’t a bubble; experts don’t expect any type of collapse like the subprime and foreclosure crisis a few years ago. This is a relatively moderate slowdown and that’s a routine reality for the real estate market. In a few months, everything could change.