Mar­ket should re­main ac­tive in 2019


Of­ten in our busi­ness we are asked what the hous­ing mar­ket is go­ing to look like down the road. And while we don’t have a crys­tal ball, there is a wealth of his­tor­i­cal data that helps in­di­cate the im­pact of the in­ter­play­ing dy­nam­ics of our over­all econ­omy, mort­gage rates, pop­u­la­tion trends, and house­hold growth on our hous­ing sup­ply, prices, and af­ford­abil­ity.

In our re­cent Santa Fe As­so­ci­a­tion of Real­tors an­nual meet­ing, Paul C. Bishop, PhD, CBE, the vice pres­i­dent of re­search for the Na­tional As­so­ci­a­tion of Real­tors, shared an im­pres­sive amount of in­for­ma­tion to help un­der­stand the cur­rent hous­ing cli­mate, both lo­cally and na­tion­ally, as we move into 2019. In 2018 our Santa Fe lo­cal un­em­ploy­ment rate is on par­with the na­tional rate, both drop­ping be­low 4 per­cent, ac­cord­ing to the Bureau of La­bor Sta­tis­tics. Tied with the over­all na­tional eco­nomic per­for­mance, the Fed’s plan to in­crease mort­gage rates was quite the hot topic this last year. How­ever, re­cent pro­jec­tions from the Wall Street Jour­nal and Na­tional As­so­ci­a­tion of Real­tors is that the 30-year fixed-rate mort­gage of ap­prox­i­mately 4.6 per­cent in 2018, will be 5.2 per­cent in 2019 and 5.4 per­cent in 2020. This is a much more bal­anced es­ti­mate than rates ris­ing to 6 per­cent quickly in 2019 that would po­ten­tially stall home pur­chases.

The U.S. Cen­sus Bureau helps iden­tify pop­u­la­tion dy­nam­ics, no­tably that Santa Fe from 2011 to 2017 has had a nat­u­ral in­crease in pop­u­la­tion from all three ma­jor in­di­ca­tors: nat­u­ral in­crease, do­mes­tic net mi­gra­tion, and in­ter­na­tional mi­gra­tion for a net gain of 4,227 pop­u­la­tion and around 1,600 house­holds. Stronger demand for hous­ing has con­tin­ued as res­i­dents from else­where re­lo­cate to Santa Fe and many peo­ple that love call­ing Santa Fe home choose to stay.

The Na­tional As­so­ci­a­tion of Real­tors has iden­ti­fied that the na­tional bench­mark of Months Sup­ply of Ex­ist­ing Homes, an in­di­ca­tor of mar­ket demand, has sta­bi­lized from 2016 to 2018, with the na­tional me­dian days on­mar­ket at 33 days. The sit­u­a­tion in Santa Fe is that building per­mits ob­tained for new con­struc­tion re­main low and the avail­able hous­ing doesn’t meet the demand of the grow­ing pop­u­la­tion. The Cen­sus Bureau counted just over 100 new per­mits re­ceived per year for the last seven years as com­pared to over 500 in 2005. Also, the cost of new con­struc­tion of sin­gle-fam­ily homes is out­pac­ing over­all in­fla­tion and many builders are fo­cus­ing on homes com­mis­sioned by cus­tomers rather than cre­at­ing spec­u­la­tive builds. This has led to ris­ing prices for new and re­sale hous­ing due to lower avail­able in­ven­tory.

At a na­tional level, th­ese dy­nam­ics soft­ened the in­crease in ex­ist­ing home sales over­all in 2018, com­pared to the steady rise ex­pe­ri­enced from 2014 to 2017. In Santa Fe, how­ever, ex­ist­ing home sales con­tin­ued to rise in 2018 and the­me­dian home price was up 5.6 per­cent over 2017. As we look for­ward, it is an­tic­i­pated that the di­rec­tion of the na­tional econ­omy will con­tinue to im­pact our hous­ing mar­ket but lo­cal dy­nam­ics, pop­u­la­tion growth, and lower avail­able hous­ing in­ven­tory as well as the de­sir­abil­ity of liv­ing in Santa Fe, are strong pre­dic­tors of an­other ac­tive real-es­tate mar­ket in 2019.

We bring a new look to real es­tate to help in­te­grate you within our com­mu­nity. A pro­found love and knowl­edge of Santa Fe com­bined with a fresh out­look, vi­tal­ity, ex­pe­ri­ence, lo­cal in­sight, and fun make Pene­lope (505-690-3751, pene­[email protected] sothe­ and Drew (505-4709194, drew.lam­[email protected]­ your trusted real-es­tate ad­vi­sors.

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