Current State of the Housing Market – January 2019 Real Estate Market

hi this is Audrey Whittington with and we’re gonna be talking about economic insights with chief
economist Danielle Hale and today we’re gonna focus on the current state of the
housing market and the reason I want to talk about this danielle is I think it’s
particularly important for first-time homebuyers. So let’s talk about
where we’re headed as it relates to them first. Okay,
so the current state of the housing market I’m just gonna back up a little bit and
say you know we we study what’s going on by looking at our inventory data on a
regular basis. We ratings regular monthly measurements that’s how we know what’s
going on in the housing market and some of the key trends that we’ve seen emerge
here in late the late part of 2018 is that inventory is starting to increase
which on the surface sounds like it would be great news for home buyers. And it is for certain home buyers but not necessarily for
first-time home buyers. Why? So the inventory that we’re trying to see come to the
market is generally in high-priced coastal markets and even in those markets
it tends to be on the upper end of the price spectrum and that’s what your
still it’s not necessarily a benefit for first-time home buyers and the market is
such where we’ve seen prices rise over the years and first-time home buyers
don’t own a home right now by definition so they haven’t seen their equity
increase it’s been a great time to own a home you’ve seen your equity increase
as prices go up but first-time homebuyers don’t benefit from that so
when prices increase that just sort of puts there you know that means they have
to save more for a down payment it increases their monthly cost it makes
things a little bit more difficult not impossible but it’s a lot more difficult
no I appreciate your honesty and candor and then let me ask you a question that
leads me to what is the average price for the homes in the inventory like
you’re saying the inventory is increasing what’s the average price of
that inventory right so where we see prices go up seasonally in January
February timeframe and they tend to hold the high price level and then towards
the fall they dip a little bit some of that is the mix of properties that are
available from the so this summer at the peak of the price cycle for the year we
were at 299 thousand were now down to about two hundred ninety five thousand
so that’s pretty stable I mean that’s not a huge margin now
No okay so okay so for first-time homebuyers you could also make the
argument though that they should jump in because rates are are stable right so
while inventory might be growing which is not great for them rates are stable
that a fair statement is there’s lots of reasons to be a first-time homebuyer
right you want to own a home so you can take advantage of some of the equity
build-up some price increases we know that mortgage rates are rising
and so buying now means you’re likely to pay less for your your mortgage payment
than in the future if mortgage rates are a little bit higher so that’s a reason
for buying now also a lot of first-time homebuyers or current renters report
that the rents are rising and yeah I remember you saying that previously yeah
so even though it’s more expensive maybe to buy today compared with what you
would pay in rent if you’re looking at the long run you you know as your rents
increase that payment that you lock in today if you do a fixed-rate mortgage
which most people do or like a fifteen or thirty yeah so that’s fixed and so
eventually rents will increase enough so that isn’t actually cheaper on a monthly
basis to own and in the meanwhile you’re building up equity if prices increase
you build up some equity and even if they don’t increase your paying down
your mortgage every month so you’re building up some equity that way so
there are lots of reasons to be a homebuyer and get into homeownership and
in fact we have seen the homeownership rate rise so even though it’s a
challenging environment for first-time homebuyers we have seen some increase in
the homeownership rate and that’s in our forecast for 2019 we expect it to
continue to increase and I can tell you just on a personal level as a person who
both rents and owns it is actually much more expensive to be renting so really
just like you said locked into a 30-year rate a long time ago and the rents are
going up so now about a housing bubble like let’s talk about just really those
two words which I actually think can be a bit inflammatory yeah yes I can yeah
you know so I think that was what we how we described the market in was in a way
I think that well I guess the peak was probably between 2005 and 2007 right
there you go into the crash after that yeah I bought a house in the crash so
you know it like when prices go down yeah
dryer so yes prices have increased now steadily for the last few years so a lot
of people are looking at the market now and saying you know we keep seeing
prices go up and open up are we there again and the answer I
would say is the lending environment is really different this time around a
great point there’s not as much mortgage activity now as there was back then
mm-hmm so and I think a lot of the leverage that was in the market then
helped you know keep home prices rising underwriting is totally changed so
that’s for the amount of documentation that’s required for buyers in today’s
market is very different and that should help make sure that people can actually
pay their mortgage like that’s an important thing that didn’t happen and
the last run up and home prices that we saw and I know that that question it’s a
tough one because people hesitate if they think we’re in a horrible they want
to stay away from the housing market and I think that you know that’s that can
kind of be a disservice because then you’re missing out on prices today and
you’re you’re missing out on lower mortgage rates and maybe you’ll see
higher mortgage rates in the future I think you know from the perspective of
buyers it’s difficult to know in advance but I can tell you a lot of the
indicators are different this time around we don’t have rampant over over
building that we had rather than last time in addition to some of those
mortgage characteristics that said housing is expensive and it can be
difficult to save up enough for a downpayment and looking at that monthly
payment but I would say know if you can find a home that fits your needs and
your wants and also fits your budget and you know still have some savings left
over so that if times get rough you have something to rely on right then I think
it’s a good time to buy a home I agree I think now is as good a time as any and I
think there furthermore there is no perfect time to buy a home and I think
sitting around and waiting really doesn’t do the economy any any service
yes that’s true too thank you that was super helpful and super informative and
thank you for joining us with economic insights with Danielle Hale and Audrey
Whittington at please check out some of our other videos you you

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