House for sale with ‘For Sale’ real estate sign in yard in spring or summer season. Photo Credit: GettyGetty
Home price growth has reached its slowest point since March 2012—a turning point for the market, when prices stopped declining and instead started rising.
In the last year, national home prices have jumped just 0.6%, according to the Housing Market Tracker from real estate firm Redfin. Just one year ago, annual home price gains were nearing 10%.
Add in that housing inventory is on the rise (data shows the number of homes for sale is up 2.9% since February 2018), and Daryl Fairweather, the chief economist for Redfin, says buyers “will have more power” as we head into the historically hot spring market.
“With more options for buyers, we aren’t going to see nearly as many bidding wars or fast sales as we did last spring,” Fairweather said. “Buyers will be able to take their time looking at all of their options. Also, mortgage rates are lower than they’ve been in a year, which is another plus for buyers because it makes buying a home more affordable.
According to Freddie Mac, the average 30-year fixed mortgage rate was 4.31% last week—the lowest it’s been since February 2017. Analysis from Black Knight Financial Services shows that declines in mortgage rates, combined with slowing price growth, have increased consumer buying power by 6%.
Ben Graboske, Black Knight’s president of data and analytics, says recent housing data spells “good news” for today’s buyers.
“Combined with the average 30-year fixed rate declining by more than half a point over the last three months, housing is now the most affordable it’s been since early in the 2018 homebuying season,” Graboske said.
The conditions are even more favorable for coastal buyers, where many markets are actually seeing home prices decline. In Bridgeport, Connecticut, home prices declined a whopping 15.2% over the year, while in Honolulu, prices dropped 2.2%.
In California, San Jose, San Francisco and Orange County saw prices dip 11.3%, 7.9% and 2.4%, respectively. San Jose is also experiencing a glut of inventory. The number of listings on the San Jose market has jumped 82% in the last year, giving local buyers a little more leverage in what has typically been one of the nation’s most competitive markets.
Still, buyers shouldn’t celebrate just yet. Spring is no doubt going to be less competitive for buyers than in years past—but it’s still not a true buyer’s market.
According to a Realtor.com analysis, though homebuyers in 36 of the nation’s biggest housing have “more leverage” than before, it would take 28 months—at least at this current pace of cooling off—for the market to tip fully in buyers’ favors.
As Fairweather explains, “Spring of 2019 is going to feel more favorable to buyers than spring of 2018 in many coastal markets, but by 2020, the housing market could easily heat back up again.”