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Is the Real Estate Market Starting to Turn?

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The 2019 spring real estate market is in full swing and many home owners and prospective home buyers may be wondering what this year’s market has in store for them.  Will home buyers be able to list their home and quickly receive a full-priced offer, maybe even multiple offers?  Will prospective home buyers be competing against many other buyers and have to make quick and above list price offers? 

Despite the fact that there are reports indicating we are on the horizon of another hot real estate market season, data from Trulia predicts something quite different. Trulia has collected data that reflects home prices have been in a steady decline since the beginning of 2018.  This trend is the first indicator that the housing market may be entering into a “cyclical downturn”.  In an article published by Housing Wire, Alcynna Lloyd quotes Trulia, “’Cyclical housing market downturns occur roughly every 10 years, and they typically don’t happen overnight. Instead, they play out steadily over a few years, first showing up in sales volumes and later—usually a year or two later—in prices,’ Trulia writes.”

Fear not, however, that we are in store for a declining market similar to the one that occurred a decade ago.  The article goes on to detail the findings of the Trulia analysis, indicating home prices should only slightly decline and are more likely to just see “flat-to-modest housing price growth”.  Yet, home owners should expect their home to sell not quite as quickly and should certainly be prepared to enter in more vigorous negotiations with buyers in order to finalize a sale.

Since these changes are not expected to be extreme or immediate, more likely gradual and result in slow steady declines or even flat growth, only time will tell how this potential change plays out.

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Studies reveal positive news for home buyers in 2019

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The spring real estate market is in full swing.  Sellers have begun the process of listing their homes with the hopes of a quick sale.  Buyers search listings, schedule showings and begin to decide on a home to purchase.  So far, in 2019, it appears home buyers are making the decision on which home to purchase faster than they were last year at this time.

In fact, a study completed by Redfin, revealed that in 2019 buyers’ time to close is three days less than in 2018.  According to an article published by the MReport, “Some of the factors responsible for home buyers being able to close on their homes faster in 2019 compared to previous years included, a rise in housing supply, a slower growth rate of home prices, and a less competitive market, according to Redfin.”

The fact that the supply of homes for sale has increased and there are more buyers than sellers often means that sellers will accept the first offer they receive.  Unfortunately, some sellers just have to wait longer to receive that offer while competing against a larger number of other sellers.  The article reports that homes are spending about two days more on the market compared to 2018.

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Time to Close, How Long Should You Expect to Wait?

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OLYMPUS DIGITAL CAMERAEarly on in 2016, the average time to close on a home mortgage loan had risen to an average of 50 days.  The delay was a direct result of the Consumer Financial Protection Bureau’s  TILA-RESPA Integrated Disclosure rule which changed the type and complexity of loan information industry professionals had to pass on to borrowers.  Within the next few months, however, the time to close worked its way back down to a 12 month low of only 44 days.

Yet, the this figure has begun creeping back up again.  Ultimately, July 2016 Ellie Mae findings reported an average wait of 46 days.   According to an article published in HousingWire.com by Ben Lane, “…is this year’s increase in days to close just the industry fully settling into the post-TRID world and finally finding some semblance of normalcy, or is it more concerning than that? Only time will tell.”

The article goes on to provide additional figures from the Ellie Mae report.   For example, July 2016 closing rate for all loan rose to 71.6% and the 30-year mortgage rate reached its lowest since March 2015. For more details, read the entire article.

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Home Purchase and Closing Rates are Showing Improvement

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For the first time in the past nine months, mortgages for home purchases have accounted for more than 60 percent of all closed loans.  According to a report released by Ellie Mae, the rate of actually reached 62 percent in May.

Additionally, the rate of loans that closed improved to 70 percent.  Specifically, the rate of home purchase loans that closed was 75 percent, with the rate of refinancing closes lagging slightly at 67 percent.

The report also notes that home buyers who are financing their home purchase have seen an average of 45 days Keys and lock the door on the background of solar gardento close their loan, which is an increase of one day from last month.

The article published by REALTORMag on June 16, 2016 provides data from the Ellie Mae Report, and also discusses the percentage of home borrowers with “high” credit scores, which exceeded 80 percent for conventional loans.

Read the entire article for these details.

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