The unemployment rate has hit a new low — 3.7 percent — that was last seen in December of 1969. Of course, things were a little different in the late 1960s. Back then you could support a family on one income and still own a house and a car. These days? Not so much. In fact, close to 5% of the population now works two jobs. Secondly, the average house in America cost $24,000. Mortgage interest rates were around 6.2% in 1968. This was considered to be relatively high back then. Things have changed a bit.
Yes, interest rates have increased, and the concern of interest rate increase is real, but rates are still inexpensive. In the 70’s they were an average of 8.26%, the 80s – 12.7%, the 90’s – 8.12%, the 2000’s – 6.29%, 2010 to 2018 – 4.23%. Will rates come down? Let’s hope not, as that would be a sign of the economy faltering.
The good news is that in the last 50 years, buyers are carrying the least debt into qualifying for mortgages, i.e. better-qualified buyers. Yes, the rates creeping up will cause some buyers to buy less, but presently it has not stopped buyers from buying. Historically, when rates move a ½ point to a point at a time is when sales slow for 60 to 90 days….then buyers jump back in, realizing rates aren’t coming back down.
Housing continues to be a seller’s market, with a lack of inventory continuing to be a problem in all price points. And home sales continue at a record pace this year. With continued job growth, the market should remain strong, but the homes have to be priced correctly (within 5% of the median value of the neighborhood) to sell.
Any discussion of slowing of the market is not true. Call the experts.