For years now, homebuyers have weathered the storm of a strong seller's market. They often found themselves in multiple offer situations, where more times than not they were paying above list price in order to beat out other buyers.
Home inventory was decreasing, home prices were at all-time highs and mortgage rates were on a steady incline. The homebuying seas were unforgiving as it was becoming increasingly more and more expensive to buy a home.
The Tide Turns
It appears that the proverbial winds are beginning to shift a little. Last week the Federal Reserve signaled that they do not intend to raise interest rates this year. While Federal Reserve rates are not the only influence on mortgage rates, it's a very good indication that mortgage lending institutions will follow suit with lower rates for borrowers. Rates are already the lowest they've been in a year and experts are now starting to predict that they will dip even lower this year on the heels of this news.
Homeowners in Nashville have also grown accustomed to double-digit year over year increase in home values, but this too has also begun to decline. To put this in perspective, last month's increase in sales price was just 1.8% year over year compared to the 11.6% we saw in 2018 for the same time period.
Lastly and probably most frustrating was the lack of home inventory that has plagued homebuyers for what seems like a decade. This, of course, had a direct effect on rising home prices. However, 2019 seems to be a different story. The first two months this year we have seen a whopping 30% increase in home inventory compared to last year.
Talk about some relief.
What's on the Horizon?
If there was a formula to quantify the perfect storm for homebuyers, it would probably look something like this:
Lower Rates + Slower Increase in Home Values + More Home Inventory = BIG WIN for Homebuyers
Which of course is exactly what we're seeing right now. These factors together give prospective homebuyers more buying power than they have had for years. Sure they will still run into multiple offer situations on the hottest properties, but this should become less of an issue for homebuyers in 2019.
If you've been on the fence about buying a home, now just might be the right time to test the waters.
Nashville housing data provided by Greater Nashville Realtors®
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