I like to start with a broad view of the real estate market as a whole and then narrow the focus down to our regional area and product type, which is residential housing in Palm Beach County. Daily I get the question of, “How’s the real estate market?” Why do people ask me? Well it’s my profession and I’m in the real estate market every day, and I also think because there is a lot of confusing noise out there for homebuyers and sellers right now. Can you trust what you hear when the media reports seemingly conflicting news every other day?
This week I saw one article from CNBC and another from Housing Wire stating new home sales were in the tank. Down almost 7% from December to January. Wow that’s bad you think! Wait though, didn’t I just see a different CNBC article a week ago that in December new home sales reached a 7 month high and another that read, “Housing prices could be on the verge of heating up again …” Huh? What? Really, you’re just gonna change the reported outlook on the real estate market in a week?! So, the quarterly update from the media is market is cold then hot, then not again. I’ll post my overall thoughts on the housing market in a separate post.
What you need to know is residential real estate is a slow mover. Most of the reports you see are guesstimates and then a couple months later they’ll go back and put out a new article with the revised numbers. Real monthly numbers going back 3 to 6 months to 12 months is a good trend line where you can make an educated decision. Guesstimates on new home sales matter a lot for builders and economists, but for the average homebuyer looking for a place to live maybe not so much. As they reported in the CNBC article, new home sales only make up about 10 – 12% of homes sales annually. Might be a bit rash to use one tenth of the sales in the US to make a prediction regarding the whole housing market.
Why are new homes sales slow? I’ll tell you why in my thoughts on sluggish new home sales post.
Bottom line – ignore it. Unemployment is low and interest rates are stable for the near future. It is a good time to buy. Having a sub 5% interest rate on a home mortgage is a great thing! If you are looking for a home for you and your family then you just need to evaluate your personal budget, lifestyle, location and functionality of the home. Your primary residence isn’t an investment, so don’t worry about if I wait a year or five will I get a better deal. The people that waited 5 years ago are kicking themselves. You just really need to evaluate what you can afford. You’ll build up equity paying down the principal with your mortgage payments. Do you have a down payment and steady employment? If you are buying a home hoping that appreciation is going to make your mortgage payments then you’re already in trouble. Don’t worry about the talking heads on TV. The investors that have built up tremendous wealth in real estate did so by buying at the middle of the market cycle, the top of the market cycle and the bottom of the market cycle. Point is they kept buying and investing for the long-term, but that’s a different topic.
Homesellers you are also homebuyers, so I wasn’t leaving you out. It is a good time to sell. I’ll leave it at that until another post. Knowing it is a good time to sell then you have to evaluate the move through the homebuyer lens. Can I sell and meet my homebuying or maybe even renting goals? Can you sell and get the home you need in a location that works for your family at a monthly budget you can afford?
Synopsis: We have a flattening housing market with low interest rates and strong employment making it good for both buyers and sellers over the next year to meet their housing needs.