Across the U.S., home appreciation is at the slowest pace in 15 months, according to a press release from Zillow. This is good news for people who are looking to purchase a home, but it is also a sign that home inventory is tight.
“The pace of home value appreciation we experienced during much of last year was not sustainable, and a slow glide path down to a more normal appreciation rate has been expected for some time,” said Zillow Senior Economist Aaron Terrazas. “This slowdown is nothing to be overly concerned with — demand from home buyers remains very high, and inventory remains tight. New home construction is growing, providing some relief to buyers who can afford the generally high price point of new homes. It’s important to note that home values are still growing very quickly relative to historic norms. After years of intense competition, some buyers may be more willing than previously to take more time with the process and to wait until the right home at the right price comes on the market, even if it’s not for several months. Removing a lot of this frenzy, especially as inventory remains incredibly tight, may prove to be good news for beleaguered buyers.”
Home Values Over the Past Year
Over the past year, home values rose around 6.7%, raising the median value of a home to $207,600. We saw some of the fastest growth since the housing bubble in May 2017 as home values rose 7.6% year over year, but the monthly increase in values has steady declined since then. While any increase in home values is a good thing, we should be watching values as home inventory tightens.
“Tight inventory will put a strain on buyers this home shopping season, even more so than last year. There are almost 10 percent fewer homes on the market than a year ago, with San Jose, Las Vegas and Indianapolis reporting the greatest drop in inventory. New home starts have increased about 7 percent over the past year, a positive trend but still insufficient to meet demand,” Zillow commented in the report.
Related: U.S. Housing Inventory at Crisis Levels, Including Tampa and Orlando
More Important Than Ever to Get a Competitive Mortgage
Getting the best interest rate with the lowest costs is always important, but it’s even more important as the housing market becomes more competitive.
In addition to tight housing inventories, interest rates are going up as a result of a strong economy with lower unemployment. Therefore, homebuyers who can compete aggressively for the home they want, in part because they have a low interest rate and can close quickly, have a distinct advantage.
Therefore, it’s important for homebuyers to get a more credibility with Realtors and sellers. Because, no one wants to work with an underqualified homebuyer, who will probably waste everyone’s time with a deal that will eventually fail.
Furthermore, homebuyers with a low interest rate who are able to close quickly can be more competitive when making an offer, compared to a similar homebuyer with a higher interest rate.
Related: Select a Mortgage Broker Who Gives You a Competitive Advantage
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