5 Summer Housing Trends To Know In 2018
The busy summer season is here. The housing market tends to pick up during the summer, but with how hot the housing market has been lately, it’s hard to imagine things moving quicker.
With how predictable the housing market has been during the summer during recent years, it would be easy to guess that 2018 won’t be any different. However, the current housing market is in a much different environment than it was just a few years ago.
There are plenty of home buyers and homeowners looking to either buy or sell this summer – and it could end up being an excellent decision for both.
Here are housing trends to know for this summer:
A hot housing market
The housing market has been on fire lately with home prices rising across the country. While some markets have been slower than others, the overall sentiment is that this is an incredibly strong housing market.
Because the summer is generally the busiest time of the year, there should be no reason to expect anything different. Home buyers are more active in the summer for a variety of reasons, regardless of how strong the housing market is.
For home buyers in some of the hotter markets, don’t expect a huge pickup. The strongest markets don’t have much room for growth at the moment, so you should be prepared for more of the same.
Rising home prices – but not too high
Home prices have been rising steadily for years now, and they should continue to do so.
The price of homes is largely dictated by how much home buyers are willing to pay. Since the demand for housing is high, home buyers will be willing to spend more money than they were just one year ago.
That being said, home price growth might slow down in a lot of markets. According to the Case-Shiller Home Price Index, home prices across the nation rose by 6.53% year over year from March of 2018 to this year. That’s incredibly quick growth, especially considering it includes smaller markets.
That type of growth is not sustainable and it shouldn’t continue. While home prices will rise this summer, it will likely be by a smaller margin.
Low housing inventory
This probably isn’t news to anyone who has been looking to buy a home for the past few years.
The national housing shortage is real, and home buyers – particularly those in dense urban areas – have been having a difficult time finding affordable housing.
Unfortunately for home buyers, this trend should continue to persist through the summer. The demand for housing typically jumps during the summer, but there’s no guarantee that housing supply will match the increase.
The good news is that housing inventory is likely becoming less of an issue. Toward the end of 2018 and going into 2019, don’t be surprised if homes stay on the market longer.
Higher mortgage rates
With economic growth occurring across the country, it would be nearly impossible to avoid higher mortgage rates.
Just last month, Freddie Mac reported that mortgage rates hit their highest average levels of the past three years. Rates are nearing even higher levels, and they should set record highs for 2018 multiple times throughout the summer.
The rise in rates is mostly fueled by an optimistic outlook on the market. The Federal Reserve has been raising rates, and this has affected every market – housing included.
Higher rates don’t always occur during the summer – in both 2016 and 2017, mortgage rates steadily declined from April through August, only to start to climb right after.
2018 is already breaking that trend. Since the beginning of April, mortgage rates are up roughly 20 basis points (0.20%). With the way the economy is moving, rates should continue to climb this summer.
VA loans continue to be the best mortgage program
While some home buyers might become worried about the cost of buying a house this summer, VA loans will continue to make it easier for veterans to purchase a home.
VA loans have consistently had the lowest rates available. According to mortgage software company Ellie Mae, the average VA loan in April had a rate of 4.63%, as compared to 4.84% for FHA and 4.80% for conventional.
Also, VA home buyers can avoid paying a downpayment entirely, something that should help them afford a home despite rising home costs.
This summer, there’s no reason to believe VA loans won’t continue to be the best mortgage program available. Anyone who is eligible and wants to buy a home this summer will likely want to use a VA loan.