There has been a lot of background noise regarding affordability issues in the housing market – we’ve been hearing about it for a few years now. In some major markets home prices fell slightly in the first quarter of 2019. At the same time, housing inventories have been growing to healthier levels, giving home buyers more options. All of this is good news and the housing market is finding equilibrium.
Against this backdrop we have a new pool of potential first time buyers, under 35, who are just now dipping their toes in the housing pool. In the first quarter of 2019 the home ownership rate among those under 35 years old was 35.4%, which is 4-8% lower than past generations. Despite a favorable mortgage rate environment, Fannie Mae’s home buyer sentiment from April (last month) showed weakness with the net share of survey respondents actually expecting rates to go down over the next 12 months. Well, Christmas came early…geopolitical uncertainties and steep declines in the bond market have prompted 30 Year Fixed mortgage rates to dip below 4%.
What we have is essentially a perfect storm setting up the summer buying season, stronger inventories, a favorable interest rate environment and a strong pool of millennials that should be considering home-ownership at this time. While existing home sales data has not been officially released by NAR, EffectiveAgents.com is predicting a very strong May 2019 – we also expect strong numbers in the final month of Q2 and a record breaking Q3.