Uncertainty seems to be the issue of the day. Are the current frigid temperatures just weather, or is it climate change? Will the Patriots bring home a 7th Lombardi trophy next year? Will the real estate market expand or contract in 2019?
For the first two questions, we can only guess. And while prognosticating about the real estate market for the entire year of 2019 would also be little more than a guess, we may be able to offer a little more clarity with respect to the early spring market, which historically begins in the latter part of February each year.
Today’s quick check of MLS reported sales closed sales for January 2019 shows a 11% drop in Dane County from 2018 reported levels (16.5% drop for the entire MLS service area of 15 counties). While the lower reported sales could just be a hangover from the higher interest rates we experienced late last year, low inventory levels continue to be the main culprit.
Currently, active listings across our entire MLS service area are a little bit higher than levels reported last year at this time, although the overall supply of inventory for the entire region still stands at a meager 2.5 months. (As a general rule, a 6 month supply of homes for sale is considered a balanced market between buyers and sellers.) While we expect increased numbers of sellers to begin putting their homes on the market soon after Super Bowl weekend, in the long run we expect to see the supply and demand imbalance to remain very much the same as last year.
Adding pressure to the buying side of the equation: Interest rates have actually dropped over the last couple of months meaning greater affordability for more buyers. Rates for 30 year loans now hover approximately ½% lower than in the fall of 2018. In comments last week, Federal Reserve Chairman Jerome Powell stated, “The case for raising rates has weakened somewhat,…”, indicating there will be yet another opportunity for Buyers to purchase in the short term and enjoy lower interest rates and lower payments for the long term.
In possibly suspending its previous plans to continue raising rates this year, the Federal Reserve signaled that its march toward higher interest rates may be ending sooner than expected. This should be good news for buyers for at least the next 6 months.Of course, geopolitical and financial issues outside of the direct real estate market can always change even these estimates on a moment’s notice. Smart sellers will get their home on the market early to enjoy offers from the most qualified buyers. Smart Buyers will get pre-approved and not be afraid to venture out in the snow to see what is available before it is gone.
At Restaino & Associates, we are experts in helping both sellers and buyers achieve their real estate dreams. Let us help you turn your dreams into reality. We want to be your Realtor of choice in today’s fast moving market.