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Jan Bigelow: 928.300.1699
Wally Reule: 928.301.5943
According to the Buy vs Rent Index, which is published by Florida Atlantic University, home prices are beginning to top out. One of the creators of this index indicates this is a good thing. Economist Ken Johnson says, “Housing markets are slowing, suggesting that we are nearing a peak in housing markets around the U.S.—but this is good news, as we are pulling back from the brink, unlike we did in 2007.”
This index measures 23 metropolitan areas, and according to another of its creators, Eli Beracha, a professor at Florida International University, as well as a co-publisher of the index, indicates that although prices are above their 40-year trend, they are not as high as they were in 2007. Beracha anticipates a slower rise in prices, with longer marketing times for sellers, rather than a crash like we experienced in 2008.
Simply put, conditions are not as dire as in 2007, pointing not to a crash, but a slowdown, as the market moves towards a more natural peak.
Locally, we are seeing a reduction in inventory; however, if this prediction is correct, we will soon see increasing inventories accompanying the slower rise in prices and longer marketing times.
So, what is causing this stall? One reason is just the basic cycling of the market. However, uncertainty around the implications of the Tax Cuts and Jobs Act is a driver, as well as increasing mortgage rates.
Mortgage rates were increasing early in 2018, but for the last two weeks, they dropped slightly according to Freddie Mac’s Primary Mortgage Survey.
What does this mean for sellers? Expect the slower rise in prices to continue, and prepare to wait a bit longer for your house to sell.