Will buyers step on the gas or brakes in 2019?
January 10, 2019
It’s the big question right now. Will buyers put their foot back on the gas pedal or will they continue to put on the brakes? For the past couple quarters in many markets around the country buyers seemed to show some resistance to prices and back off the market a bit. So we saw more sluggish sales volume, and now we’re wondering if it’s going to continue into the new year. I have a few quick thoughts and then there’s a big monthly market update for those interested.
What will buyers do in 2019?
1) We need time: Just like a dating relationship needs time to figure out where it’s heading, we need a little space to see where the market is going to go. In the next 30-90 days especially we should get a better understanding of the direction of the market.
2) Interest rates are a band-aid: Mortgage rates are declining again and that can be a steroid to help buyers jump back into the game. During the second half of last year there was a strong negative reaction to rate hikes, so we’ll see if lower rates today can create a similarly strong positive reaction to propel buyers back into the market. But let’s remember low rates are really just a band-aid on a gaping wound. What I mean is low rates offer a temporary solution to create more sales right now without making any dent in the huge issues of a housing shortage and affordability.
3) What to watch: I have a couple quick recommendations for what to watch over the next few months. First of all, know what is normal for the spring market. What normally happens to things like sales volume, inventory, prices, days on market, etc..? Knowing what is normal can help us spot what is not normal. Secondly, I recommend keeping a close eye on listings. Is the market absorbing inventory? Are properties getting into contract? And is the number of pending sales normal or not? Remember, if pendings are anemic today, in a couple of months these properties will close escrow and show up as anemic sales volume. So by watching listings and pendings today we can get an idea of what sales might be like in a couple of months.
I hope this was interesting or helpful.
Courtesy of www.LundquistCompany.com