February 2019 Market Insight

February 2019 Market Insight

Thinking about buying or selling a home? Is now the time to do so or should you wait? What factors should you know more about before deciding? Check out this Martin Real Estate Advisors Group | United Real Estate Monthly Market Insight each month to find out what the experts have to say about 2019.

Then we invite you to contact us for a complimentary, no obligation discussion about your specific situation. Then you will be ready to make an informed decision to act or wait!

There is Good News for Spring…

Mike Fratantoni, the Chief Economist at the Mortgage Bankers Association: “The spring home buying season is almost upon us, and, if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”

Inventory…

We expect to have a solid spring market. First off, housing supply in the last 12 months, six of those months – inventory was up year-over-year, and one month, it broke even at zero. So, we are really building inventory, and that is a good sign.

Mortgage Rates…

Second thing is, mortgage rates are at the same level they were last spring, last April. That is good news, too. They had gone up and dramatically toward the end of the year and that slowed the home buying process.

Well, rates are back down, and people seem to have gotten over the sticker shock. So, going into the spring, with the inventory that we have, with interest rates where they are, with the economy and the jobs sector doing as well as it is, we do believe the signs point to a strong spring.

Lawrence Yun, the Chief Economist at NAR said: “The housing market is obviously very sensitive to mortgage rates. Softer sales in December reflected consumer search processes and contract signing activity in previous months when mortgage rates were higher than today. Now, with mortgage rates lower, some revival in home sales is expected going into the spring.”

So now, you have the Chief Economist at the Mortgage Bankers Association and the Chief Economist at the National Association of Realtors saying the same thing. Spring is going to be a good market.

Following up with that, especially regarding interest rates, Aaron Terrazas, the Chief Economist at Zillow: “There is strong reasons to believe that the housing market is more responsive to changes in interest rates than it has been in the past, accelerating when rates drop and slowing when rates rise.

Mortgage rates hit seven-year highs in November, but then, fell back in December. If they remain low during the early months of 2019, the housing market could see a modest reacceleration.”

We realize there is some uncertainty as we move forward, however we think that the market is going to take off.

Homes Sales & Price…

Freddie Mac agrees with the strong market projection: “Total home sales are expected to slowly regain momentum, increasing to 6.09 million in 2019 to 6.14 million in 2020. For 2019, we expect home sales growth to be mostly driven by existing home sales, while new home sales are expected to remain almost flat.” So, again, that increase in home sales is going to mean existing home sales.

And then, Ivy Zelman said: “We believe that the best home price growth is likely in the rear view mirror and the market is likely to skew toward transaction growth, which should, ultimately, provide a more stable foundation for affordability in the housing market.” So, what is Ivy Zelman saying? The number of transactions – house sales, are going to go up.

Transactions…

There is going to be transaction growth and prices are going to continue to moderate. We are going to continue to see a slowing down in rates. But prices are not expected to fall.

Here is the projected home price percentage appreciation going forward. The Home Price Expectation Survey, which comes out quarterly, Ivy Zelman and Associates, Mortgage Bankers Association, Freddie Mac, the National Association of Realtors, and Fannie Mae are all projecting over the next two years that prices will continue to appreciate, just at lower levels.

So, when we see the headlines saying prices are dropping, we must be sure we read the article closely to determine what is really being said. Probably what the article is saying is that appreciation is decelerating, not that we are heading into depreciation. And it is important to understand the difference.

Most listings come to the market during the spring, during that spring Buyers’ market, in April, May, and June. But, if we look at the number of single-family listings right now, we can see it has dropped dramatically through the end of last year. That means there is an opportunity right now for a Seller to get a good deal on their house. There is less competition. Waiting until the spring when there is more competition makes no sense.

Nerd Wallet did a study and found that “approximately one third, 32 percent of Americans plan to purchase a home in the next five years.

Millennials are most likely to have such a purchase in their five-year plan, 49 percent, almost one out of two millennials, versus 35 percent of Generation X and 17 percent of Baby Boomers.” So, what we are seeing is there is going to be continued purchaser demand.

How many Buyers are trying to buy versus how many Sellers are trying to sell? And that is shown – and the ratio is shown in the inventory levels, the month’s supply of inventory. And, as we can see, that has dropped off dramatically since the middle of the year.

So, again, we are at levels now that really look even better than what last spring Buyers’ market, last April, May, and June were. So, there is less competition right now versus the number of Buyers in the market right now. And the number of Buyers is going to continue to increase.

And another interesting survey that was recently done where they talked to people. “What do you dislike about renting?” And they could check off multiple answers.

Fifty-two percent of the people surveyed said that rising rental costs was the biggest challenge, what they disliked the most about renting. Feeling like I’m throwing my money away. Not building equity – they are smart enough, the renters, to realize that, as prices continue to rise – and they will continue to rise – they are not getting the advantage of that. Not feeling like it is truly home. Feeling like I am paying my landlord’s mortgage. Not being allowed to have pets. Even the dog and the cat came into the situation.

So, what we are looking at is people really dislike renting for all the right reasons and want to buy a house, over the next five years.

And there are some myths to destroy. Number one – 49 percent of renters believe you need a 20 percent down payment to buy a home. That is is not true. They can get a deal with five percent down. They can get a deal with three percent. If they are a veteran, they can get a deal with zero percent down.

Another myth out there – 24 percent of renters believe you need a 780 to 800 credit score to be considered for a mortgage. According to Ellie Mae, 53 percent of all the deals closed have a credit score of 750 or below.

Bottom Line…

If you are thinking about buying or selling real estate in the Dallas-Fort Worth area you will want to have the latest insights on the local markets and what has been happening from an active listings and property sold perspective in your neighborhood before you act.

We would be honored to answer your real estate questions, and to assist you in maximizing your real estate return-on-investment from your real estate transactions in 2019. Give us a call at 469-262-5411 or just complete the GET IN TOUCH form on this page and we will follow up with you as soon as possible.

The Latest Local Housing Market Statistics…

For your information, we have provided below the latest housing statistics for Collin County, Dallas, County, Denton County, Rockwall County, and Tarrant County courtesy of Republic Title and NTREIS, and Dallas courtesy of RealWealth Network.