ARE RISING RATES DRIVING HOME BUYERS AWAY?
In Northern Kentucky 2018 was a tough year to be a home buyer. Defined as a seller's market like most of the U S, if one were looking to buy you needed to be paying attention all the time. For home buyers having a real estate agent who was on the ball was imperative.
Fast forward to 2019, winter in our neck of the woods along with the holiday season tends to put a damper on new listings of homes for sale. At the same time it can be a great time to buy or sell because the competition is lessened. We saw interest rates rise in 2018 and so far there is a projection that long term rates will rise somewhat in 2019. The question of whether these rising rates are driving home buyers away is interesting.
Compared to the last few years leading up to 2018 affordability hit a turning point. As rates rose and home prices rose affordability eventually became an issue for some buyers. They find themselves not able to buy what they want and may choose to take a seat for a while or to settle for less home. My experience is that home buyers did not abandon the idea of buying a home even with rising rates as much as they struggled with the lack of inventory.
There are still plenty of low down payment products available and underwriting has loosened up quite a bit over the last couple of years. This part of the equation is great.
So in 2018 we battled low inventory, rising prices and rising interest rates. Let's face it many homes in much of the Northern Kentucky market were fetching prices unheard of two years ago. The good news is that in 2019 the rising prices should be much more reasonable, interest rates may rise but not as much as 2018 and inventory is expected to be greater.
Moving into 2019 I expect home buyers to be pragmatic about a home purchase. I expect them to do their homework and work with a reputable agent who can guide them through the home buying process, an agent who has their best interest at heart. We have enjoyed several years of unusually low interest rates. Now that they have risen is not a reason to abandon the idea of buying a home. I believe the lack of inventory is a bigger reason home buyers may be driven away. Hopefully that eases up in 2019