INTEREST RATES – Mortgage rates had been hovering around historic lows in the mid to low 3% range the last few years. Then in 2018 they started increasing to nearly 5% with fears that they would continue to climb. But surprisingly in 2019 rates drifted back down to the high 3% range again. Refinances are booming and this could have a positive impact on the economy as people improve their monthly cash flow or use the money for home improvements, which stimulates many sectors of the economy.
INVENTORY – For most of this year inventory has been higher than last year, but as I write this it’s actually lower than this time last year. The population has grown, so a larger number of homes for sale would be expected as there are more homes to start with. There are quite a few new home subdivisions with available inventory.
PRICES – Prices have been fairly stable the last year or two, with some ebbs and flows, but nothing like the drastic swings during the mortgage meltdown and recovery. Overall the median price for a home in our area is about 6-7% higher than it was two years ago.
AFFORDABILITY – Many homebuyers are getting squeezed out of the market because home prices have risen faster than household income. Mathematically, that situation can’t continue and could lead to a pullback in prices, although lower interest rates are helping a bit. The economy has been very strong and if that leads to higher wages, that should help homebuyers afford more home.
As long as we don’t see any big negative shocks to the economy and interest rates stay low, I’m guessing 2020 will be about like 2019 was: Relatively low inventory, modest or gains in appreciation, but affordability will still be a big problem for many buyers.
If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). Voted “Best of Brentwood” multiple times. To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty.