The latest Case-Shiller report showed home prices are continuing to rise, but now experts say not only are those high prices here to stay, but homebuyers could be pummeled this spring by an increase in competition.
As the hottest selling season in housing officially closes in, the typical twists and turns of the market during the seasonal switch are highlighted by current market conditions of squashed inventory levels, stretched home prices, and steeper rates. Zillow senior economist, Aaron Terrazas, touches on this with, “The spring home shopping season will soon be in full swing, and with it we can expect the usual seasonal bump of would-be home buyers to come out of the woodwork to compete over a shrinking pool of homes to choose from. But in a twist, this year’s buyers may be competing against some of those buyers who have been unsuccessful during the past few months.” The fierce pursuit of homeownership continues to drive prices up creating pressure for buyers, while skim inventory and fewer shopping options beg sellers to simply stay put. Lawrence Yun, chief economist for the National Association of Realtors, breaks it down to HousingWire.com with, “There’s no question that a majority of homeowners have amassed considerable equity gains since the downturn. Home prices have grown a cumulative 48% since 2011 and are up 5.9% through the first two months of this year. Supply conditions would improve measurably, and ultimately lead to more sales, if a growing number of homeowners finally decide this spring is the time to list their homes for sale.” This vying tug-of-rope across the market is creating tension going into the spring selling season, leaving some experts worried about a potential snap.
Even a rise in rates has left buyers relatively unphased as the other more deterring forces at work keep competitors in the housing arena at odds. Again, HousingWire.com points to Aaron Terrazas who maintains, “Limited supply, fierce competition, and rising prices are forcing many buyers to stay on the market longer in hopes of finding the right home at the right price. More inventory is really the only cure for those pressures right now, especially for those at the entry-level end of the market, but it has proven frustratingly slow in coming.” If sellers continue to remain stationary, so will high home prices, further exasperating any movement on the buyer side. Experts like Danielle Hale, Realtor.com chief economist, cuts to the chase explaining, “Our first glimpse into Case-Shiller home price data in 2018 confirms high prices are here to stay. In fact, if we continue to see a steady stream of buyers and owners remain largely uninterested in selling, we can expect prices to continue to rise.” Full swing ahead into spring, market players can only hope that the push and pull between them won’t throw either side off balance into a pressure pit of competition where no one is poised to win.