10 Reasons for housing to celebrate
Spring is the peak home buying season for many parts of the country. After years of softer home sale activity – thanks to low housing inventory, affordability issues, and more – this Spring home buying season could prove to be one of the best in years. Why?
Call it the “Goldilocks” economic scenario – and here are several bullets that should help housing not just this Spring, but for the foreseeable future:
- The Fed has stated they will not raise rates in 2019. Yay!!! There is actually a better chance of a rate cut before 2019 comes to an end. This means home loan rates won’t go too high.
- Inflation remains subdued – for now. Low inflation means lower rates.
- Home price gains are slowing year-over-year to healthier levels, and at equilibrium with personal wage gains. In years past, housing prices were gaining 10% to 15% or more, and wages were growing at 2%. Now we are seeing house prices increase 4% to 5% year-over-year, just slightly more than wages.
- Housing inventory is increasing. This is a big change from years past and should it continue, buyers will continue to come to the market and take advantage of the “Goldilocks” conditions.
- The Labor market remains solid. People buy homes because they feel good about their job and their future. Unemployment is at a 50-year low. This is very positive for housing.
- Europe can’t get out of their own way. Their economies are weak and that is keeping their bonds yields ultra-low. This is putting downward pressure on US Bond yields. Yes – you can thank Europeans for your low home loan rates.
- The Stock market is right at all-time highs. This means higher 401K and IRA values create a positive wealth effect that should provide a nice tailwind for housing. People with money spend it.
- Consumer Confidence and Sentiment are increasing again thanks to the Fed no longer hiking rates, the strong job market, and Stocks up nicely in 2019. “Confident” consumers purchase homes.
- No fear of a US recession as Friday’s March Jobs Report showed 196,000 new jobs created, a great rebound higher from February’s 33,000 – which had stoked some recession chatter.
- Home loan rates continue to hover near 14-month lows, thanks to the many bullets above.