After last year’s active spring, the housing market’s fall home sale decline shocked many. Although home sales were on target to outpace the previous year’s activity, the slowdown diminished the spring’s impact.
In fact, the National Association of Realtors Jan. 22 press release indicated a sharp decline of home sales during December. The 6.4 percent month over month nationwide decline should not have been a surprise because of the season. However, December’s nationwide 10.3 percent sales decline from the previous year is significant. The Greater Capital Association of Realtors indicated that Montgomery County single family home sales decreased 12.2 percent during December.
Back in August, I predicted and discussed the causes for the fall’s sales slowdown. Among the issues that contributed to the slowdown include increasing mortgage rates and the continued home sale inventory shortage. However, it is important to note that although home sales seemed to go to sleep during the early winter, home sale prices continue to increase. It is not the 4-5 percent price gain that home owners have become accustomed. But the 2.9 percent nationwide price increase (2.7 percent increase in Montgomery County) during December is indicative that home ownership is still valued.
Although there are many who are saying it is now a buyer’s market, it is not entirely true. The current housing environment has home buyers under pressure. Increasing mortgage interest rates are making buying a home more expensive, and there are not many homes from which to choose. Consequently, motivated homebuyers who are eager to buy a home during the winter are pushing back against high home prices. The reality is that home sellers will remain in the driver’s seat as long as they price their homes correctly.
There is a lot of promise for the spring, but it still depends on many factors (such as inventory). But the push back on increasing home prices will likely continue, as home buyers are increasingly sensitive to housing costs. Rent vs. Buy and housing affordability will once again become hot topics this spring.
If you are a homebuyer trying to figure out the market, consulting with a professional realtor can help you decide if it’s the right time to buy a home. Trulia’s Rent vs. Buy Calculator is a tool that compares the cost of buying to renting a home over time in a specific area. It can estimate the point at which home buying is better than renting. However, depending on your budget and area, renting may be a better financial option. Montgomery County Department of Housing and Community Affairs and the Housing Opportunities Commission (hocmc.org) offers affordable housing programs for first time home buyers and renters.
If you’re a homeseller, think back to the 2014 spring housing market when homebuyers pushed back at the sharp home price gains of 2013. It’s recommended that you do not take home buyers for granted, buyers are just as savvy as you. Do not over-price your home, however expect to negotiate the price. Make your home show its best through preparation and staging. Stay away from cheap renovations meant to look expensive, this can actually decrease your home’s value. If you are selling “by owner,” consider consulting a staging professional to help prepare and stage your home. If you are listing your home with a realtor, your agent should have a strategy to sell for top dollar in this market.