May 15th, 2019 | Updated on June 3rd, 2021
Spring is traditionally peak home buying season, but this year, real estate conditions are different compared to last year’s scenario. In 2018, the housing market was overheated with a low inventory and rocket high prices. This year, unless you’re buying a luxury property, a lot of markets have cooled, and fewer price bidding wars mean you might have enough time to shop and even negotiate prices.
1. Affordability Is An Important Factor
Sales and prices for pricey coastal real estate dropped by19% in Los Angeles, 15% in Seattle, and 14% in San Francisco, according to a Redfin analysis. Chief economist Daryl Fairweather of Redfin says, “Home prices got so expensive in those places — we saw double-digit price growth in the last couple of years — so this is kind of a correction year for those markets.”
In places where houses are reasonably-priced, sales and prices are increasing. Orlando’s market saw a rise of 24% and Baltimore’s rose by 35%. Affordability is the main driver for gains in these big markets. The chief economist of the National Association of Realtors (NAR) says, “It’s all about affordability. Prices had reached a point in some areas that they were beyond the reach of many potential buyers. As a result, prices have dropped and sales have slowed.”
2. Inventories, Interest Rates And Financial Situation
Your financial situation also dictates the best time to buy real estate. Strong credit scores and liquidity put you in a strong position to purchase property. Even if you don’t have a large supply of cash on hand for a down payment, you can also tap sources of financing such as banks, crowdfunding platforms or a retirement account.
The Federal Reserve raise interest rates to contain inflation and keep the economy stable. Currently, the average 30-year fixed mortgage rate is 4.29% down 9 points from rates published in late April 2019 or 2018. Low interest rates can save you a bundle on your mortgage if you’re quick enough and close a deal when they are dipping.
3. Fewer Bidding Wars
Compared to last year, property shoppers are less likely to face bidding wars now. According to Redfin, only 15% of offers had competition in April, representing a 60% decline in comparison to 2018.
Fairweather of Redfin says, “Right now could be as good as it gets for buyers who want to avoid getting involved in bidding wars and price escalations. There are many forces at play that may lure buyers back and create more competition in the near future. Interest rates are low compared to last year, price growth has stalled and has even fallen in some West Coast markets, and wages are growing.”
So yes, now might be a great time to get your hands on a piece of property. Prices are affordable, interest rates are lower, inventory is good, and there is less competition.