Whether you are considering buying a home or selling a home in Richmond Hill, you’ll likely be keeping up to date with all the latest news about the real estate market. What you read there could be a bit disconcerting.
Just about everyone, including so-called experts, are claiming that the end is nigh for the housing market. The reality is that real estate is one of the few bright spots of our economy. There are three main reasons this is obviously the case:
- Mortgage Rates
- Pending Home Sales
- Consumer Confidence
Here’s how these three elements break down
Mortgage applications are on the increase. They’ve gone up around 15% over last year. This is a solid piece of proof that the decrease in mortgage rates has likely propped up the market.
Just take a good look at the numbers and you can see that purchasing a home can be more cost-effective than renting when the rates go down. Owning a house also means generating extra wealth compared to renting.
Let’s look at an example; if you considered purchasing a $300,000 home with a 30-year mortgage in the fall, that same house would cost you $160 per month less thanks to the drop in interest rates. That adds up to a total of $60,000 off of the total cost of the loan across those 30 years.
Pending Home Sales
When someone agrees to purchase a house and signs the purchasing agreement, the home is switched to being listed as a pending sale. The home sale will, according to the contract, be sold. What matters is that the house isn’t listed on the market anymore.
The current number of pending house sales in the US is the highest it’s been since 2017. Pending home sales have always been a solid indicator of the strength of the real estate housing market. Despite what the news has told you about a reduction in new-home sales, the truth is they’ve increased 15% across this year.
Current customer confidence in the market is measured by several universities and government offices. For example, the University of Michigan recently released their consumer confidence poll for August. The poll showed that overall, consumer sentiment was declining.
It’s worth keeping in mind that when news articles discuss consumer confidence they mean confidence in the whole economy rather than an individual section.
The Home Purchase Sentiment Index from Fannie Mae looks at consumer confidence for the housing market exclusively. This is what you should pay attention to when looking at the health of the real estate market.
The Confidence Board suggests that more people than ever before are interested in purchasing a new home. The amount of interested purchasers is the highest since the financial crisis started.
While some “professionals” and journalists like to spread a message that it’s all over for the housing market, consumers appear to have other feelings according to Fannie Mae.
What About the Recession?
There are four phases to the business cycle of the economy. There’s the expansion phase, peak phase, recession phase, and trough phase. Our economy is primarily in an expansion phase, which includes wage growth, robust sales, low unemployment, and increased GDP.
Economists are spreading a message that we are reaching the peak of our current cycle – which lasts an average of ten years – and so we can expect to hit a recession soon.
You shouldn’t let the talks of a recession put you off of implementing your real estate plans, whether you were planning to buy a home or sell one.
This is especially true if you were planning on selling this year – or the next – as homes actually sold more during every recession in recent memory, bar one. The market actually seems to perform better during a recession.
While many economists are predicting a potential recession, none of them believe that it is because of our housing market (which was indeed at the center of the 2008-2010 recession). As such, the market should remain relatively unscathed if a recession hits.
You should keep in mind that the market is currently stabilizing following the recent strong sellers’ market. Now is the time to start your real estate journey in Richmond Hill, no matter what the doomsayers are saying.