The end of June marks the close of the second quarter of 2018, and mid-year is a great time to reevaluate your Realtor® marketing plan. Here are some of the trends we’re seeing:
Is the economy heating up?
Interest rates are rising slowly, the unemployment rate has dropped to 3.9% — the lowest it’s been since 2000. It appears that the Federal Reserve is about to raise the federal funds rate by a quarter of a percentage point, despite slowing home sales. The 2% inflation target which the Fed has been aiming for has been reached, and another raise in rates is expected in the September timeframe. The stock market continues to reach all-time highs, and workers are finally beginning to see a slight increase in wages as a result of a tightening job market.
According to the National Association of Realtors®…
- The first quarter of 2018 saw the best quarterly existing sales pace in a decade at 5.62 million with an expected finish of 5.64 million — the highest since 2006
- Listings in the lower and mid-market price range are hard to find and going fast
- New construction has been slow to respond to demand, due in part to increased material costs and labor shortages
- New single-family home sales are likely to total 620,000 this year, up 8.4% from 2016
A Paradox: “A good time to sell but a hard time to buy”
According to Fannie Mae’s June Mortgage Lender Sentiment Survey®:
- 92.3 is the all-time high for the Fannie Mae Home Purchase Sentiment Index — a 6.1 point increase year-over-year
- 28% say it’s a good time to buy a home — up 1 percentage point year-over-year
- 46% say it’s a good time to sell a home — down 1 percentage point year-over-year
- 40% say home prices will go up in the next 12 months — no change year-over-year
- 49% say mortgage rates will go down over the next 12 months — down 1 percentage point year-over-year
- 78% say they are not concerned about losing their job — up 2 percentage points year-over-year
- 21% say their household income is significantly higher than it was 12 months ago — up 3 percentage points year-over-year
What the numbers tell us
For real estate agents out in the field, there are no surprises here. The good news and bad news seem inextricable linked. Tight inventory continues to frustrate buyers shopping for affordable homes while rising prices — expected to increase by as much as 5% this year — incentivize owners to sell. The convergence of an aging population and a generation coming late to the housing market may break this log jam, provided wages continue to increase. Only time will tell.
The bottom line
From a marketing perspective, consumer sentiment would suggest a focus on educating consumers. Helping them find alternative properties in need of renovations and/or multi-family units might be one way for first time home buyers to get a foot in the door.