We have lots of sources of information and there is a tendency to think that we can truly narrow and predict everything that is going to happen for a particular piece of property at the drop of a hat. That's not true. In fact, I would wager a lot of it is crystal ball chicanery designed to make us look smarter than the average bear and 'seal the deal' with a particular client. Now, that's not to say that all of it is verbal sleight of hand.
So here are a few predictions that have a very high likelihood of being true both here in the Charlottesville Real Estate Market as well as the Nation as a whole.
Millenials are Moving into the Market
The tried and true generation that has fueled the market up to now has been Baby Boomers. This is an easy thing to say as they have been the largest percent of the working / consuming population for decades. They placed a much higher value on being in one city for life and it showed in their propensity to buy a home and settle down. But that's not so true today. The largest cohort of population by age group is 23-year-olds. Followed closely by 24 and 22-year-olds. This is a huge number of people who are in the age bracket where they married and start families or choose places to settle down and work a job for a while. As this groups gathers their buying power they can make an impact in the market and help to push up home prices a small amount over the next decade.
Where we live is changing as a Nation
As the average age of home buyers begins to drop, the places they buy are changing as well. This generation is noted for wanting to live in smaller, more efficient, more green homes. They do not believe that those homes are solely located in rural areas but are looking for easier access to the city, decreased reliance on cars for transportation and more urban areas. Ass to this that New construction remains at all time lows and there is simply not as much housing available in suburbs and rural areas for first time home buyers to buy.
Mortgage Rates will Rise.
They will, I swear. I know, I know; we said that in 2014 and it didn't really happen. But it is coming. I think people who are a little younger than I do not remember the 80's. In the 80's I bought a house and got a mortgage rate of 14%. All of my friends were so impressed I got a rate that low! So here's the low down. When rates go up, how much house you can afford goes down. By a lot. And it's coming. Maybe in a small dose this time around but it will continue. It's the way of the world that as the markets improve the rates go up. And the market has very little else to do after the crash than improve. Some of the rate increase will be offset for FHA borrowers in the decrease in costs for Mortgage Insurance Premiums that FHA is enacting.
Home Prices will go up, but not as much as you think
Once the market began to recover home prices JUMPED up at a pretty good rate. This was mostly rebound; markets trying to get back to something close to their original value. I don't mean to rain on anyone's parade, but that's over. Now we are back to something more normal. Normal meaning something before the market went crazy with unsustainable growth. If you're selling, however much you may read blurbs that say home prices are up 10%, it's just not true. At least not how you think. Average home prices may be going up a lot, but the average home values are not going up that fast. The prices are climbing faster because we have fewer and fewer distressed, foreclosed or short sale properties on the market. So now, if you want a $400,000 home you actually have to pay $400,000 for it. This raises the median price. The values are not climbing that fast. They are starting to stabilize and their growth will be largely dependent on the demand and the economy.
And of course, if you want to buy or sell a home in the Greater Charlottesville area, then I want to help you.
Quinton Beckham
Keller Williams Realty
3510 Remson Court, #301
Charlottesville VA, 22901
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