For 2018 we’ve seen a strong seller market, but industry observers are starting to grumble that it looks like we may be heading into a change. See the chart to the right to understand where we are in the cycle.
Housing is indeed cyclical. We swing regularly from a seller’s market to a neutral position then into a buyer’s market. When the last housing crisis hit we were in a strong buyer’s market, with over 7 months of inventory at a time. The last year we’ve seen a strong seller’s market here in Pennsylvania, with lack of inventory and good houses to sell. Now, we may be seeing the start of a shift again.
One of the reasons the housing market is showing signs of a slowdown is due to rising interest rates. It makes owning more expensive, especially impacting first-time homebuyers. It also affects move-up buyers in that they are faced with high rates on their new mortgage compared to the ones they got just a few years ago. That change could be, for instance, from 3 percent on their old mortgage to 4.5 percent or even higher on their new mortgage. That’s a huge jump for many and a valid reason not to move.
If you’re looking to buy, even with the lack of inventory we are seeing signs that some houses are sitting longer on the market, and as we enter fall/winter the market may swing in your favor. If you’re a seller, make a price reduction now to avoid being “that house” on the market that’s still stuck there when the snow falls.