2019 Buyers Have the Most Options in 5 Years
After years of an increasingly competitive market, home buyers are starting to see more options this year. According to Zillow, US for-sale home inventory is up 1.2% year-over-year, meaning for the first time in over five years the housing market opened the year with more homes for sale than the previous year. 28 of the 35 largest markets saw inventory increases over the past year. The most significant inventory increases took place in the busy West Coast markets, that were experiencing some of the most severe inventory constraints.
The most commonly reported problem home shoppers faced last year was lack of available homes for sale. In some especially busy markets, sellers were receiving multiple offers, one after the other, on their homes. During the second half of 2018, however, the market started to shift. Aaron Terrazas, Director, Economic Research at Zillow, commented, “the number of homes on the market is hesitantly inching higher – now approaching the highest level in a year and a half. And in the priciest markets, the jump has been even more definitive.”
From the RE/MAX National Housing Report, based on MLS data: homes spent an average of 59 days on the market and January 2019 had a 3.9-month supply of for-sale inventory, up from January 2018’s figure of 3.4 months. RE/MAX CEO Adam Contos stated, “The good news is that inventory levels in January continued to rise on a year-over-year basis, providing incremental improvement in what's been a multi-year shortage of for-sale homes. This is a positive for home buyers, as the market continues to swing their way.”
The increase in for-sale inventory has not quite curbed home price appreciation. Home values continue to appreciate annually, in all of the country’s 35 largest markets. But rents are also rising rapidly. The US median rent is up 2.1% year-over-year, to $1,468/month, the largest annual increase since May 2018. In 2018, the Federal Open Market Committee raised the federal benchmark interest rate four times to keep up with inflation. After its January meeting, the FOMC announced a plan to scale back interest rate hikes, causing a cooldown in mortgage rates that could help affordability in 2019, even with rising home prices.
Even with the recent positive inventory trends, many markets will still see stiff competition in 2019. The best defense for home buyers is to get preapproved before they start shopping. Making an offer with mortgage preapproval shows the seller that you’re serious and can ensure a faster transaction. If you have any questions about preapproval, please let me know.