The housing market is expected to heat up this fall, despite buyers showing greater signs of being conservative in their home purchases.
Bankrate.com recently highlighted some of the following trends to watch this fall in the nation’s real estate market:
1. An overall pick up in housing activity. Low inventories of homes for sale in many markets have been blamed for cooling the summer months more than expected. However, more inventories are hitting U.S. markets, which could unleash some pent-up demand among buyers.
At the end of August, housing inventory was at 2.31 million existing homes available for sale, which represents a 5.5-month supply of homes, according to the National Association of REALTORS®. That’s 4.5 percent higher than a year ago.
When buyers have greater options in their home shopping, they may be more likely to finally jump off the sidelines, says Jonathan Corr, president and chief operating officer for Ellie Mae. “The housing market is going to be a function of the economy,” Corr says. “I think we are going to see steady growth in the coming months.”
2. Buyers are more cautious. In what most housing experts describe as a “seller’s market,” buyers are showing signs of getting more conservative with their spending, Pava Leyrer, director of training for Northern Mortgage Services in Grandville, Mich., told Bankrate.com. “They are sticking to their budgets,” she says.
The past housing crisis has prompted buyers – particularly the younger generation — to be more cautious, as they’ve learned that home prices don’t always appreciate. The younger generation views a house as a place to live and not the great investment that their parents once considered, says Daren Blomquist, vice president at RealtyTrac. Forty percent of the millennial generation believe buying a home is a safe investment with great potential, compared to about 50 percent of boomers, according to a survey by Fannie Mae National Housing Survey.
3. Mortgage rates will climb – really. Housing experts warned that mortgage rates would rise this year, but those forecasts have largely been wrong to this point. However, the Mortgage Bankers Association expects the 30-year fixed-rate mortgage to start its climb to 4.5 percent by the fourth quarter, and continue to gradually climb and reach 5 percent by mid-2015. That’s prompted some lenders and real estate professionals to urge their buyers to lock in a mortgage rate now, while they are still at yearly lows.