It's been a seller's market in residential real estate for more than a year now.
According to Realtor.com, that's fantasticfor homeowners, and for the U.S. economy overall, but let's get real: It creates a challenging environment for people who are trying to buy their first home. Fear not, first-time home buyers! Things are going to get bettersoon.
The main reason we've seen above-average price appreciation is limited inventory. And that leads to bidding wars. Thankfully, higher prices ultimately help solve this problem by encouraging more owners to put their homes up for sale.
So the market is clearly shifting toward more of a balance in the second half of the year. Combined with a temporary reprieve from rising mortgage rates and slightly easier access to credit, buyers should find it easier to purchase a home in the months ahead.
Listings have grown an average of 4.5% over the past three months. New construction is also finally stepping up to relieve pressure as well, withsingle-family permits up 9% year to date over last year.
And prospective buyers are noticing the difference. From our daily surveys of visitors torealtor.comwho are looking to buy a home, the No. 1 reported obstacle to making a purchase in June remained œI have not yet found a home that meets my needs. However, the percentage of respondents reporting this problem declined from 42% in January to 37% in June.
For first-time buyers, the fact that they're œjust starting to explore became their No. 1 obstacle in June, bumping the issue of finding a suitable home for the first time this year.
Don't get me wrongsupply is still tight.
But we are moving in the right direction. Weshould see the median age of inventorythe number of days a house sits on the marketplateau and even increase in the months ahead as a result of supply expanding. This will be a clear sign that the market is moving toward more of a balance.
Access to credit has been holding back many potential sellers and buyers from participating in this market. That, too, is slowly changing for the better. Mortgage credit availability was 5% higher in June than in June 2014, according to data from the Mortgage Bankers Association.
Meanwhile, even though mortgage rates are now well off their lows, with the average 30-year fixed-rate firmlyabove 4%, rates have retreated more than 10 basis points from their recent highs.œLock and œfloat-downare two moves to put in your dance arsenal this summer and autumn if the direction of rates is unnerving you.
Finally, the upcoming change of season should favor you first-time buyers, assuming you are flexible about timing and can find a home that fits your needs. Families with school-age children are far less likely to compete for homes on the market after the beginning of the school year, which for many is in August.
While inventory levels will also be lower due to the season in most areas of the country, the fall could turn into a great time to buy.
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