When an American reaches that place in life where they own their own home, there’s a societal nod of agreement: that person has achieved the American dream. It’s only up from there.
In 2019, how many U.S. citizens will see that nod? Fewer than in years past, say the statistics.
The undecorated reality is that the price-tag on houses keeps climbing and the average American’s paycheck does not. In some areas, homes are selling for 6.7% more than they did last year, and in 2020 they will sell for 6.7% more than they did this year. On a $200,000 home, that’s a hike of $27,700 over two years—almost $30 grand.
And, while housing prices are increasing, so are mortgage rates. Some predict (Zillow, most notably) that by the end of 2019, mortgage rates will reach 5.8% for 30-year loans, which means higher monthly payments on those mortgages.
It’s no wonder that the homeownership slice of the American dream pie is simply out of reach for many average-income earners. ATTOM Data Solutions published a report underscoring this fact. It found that the affordability of American homes is at a ten-year low.
If housing prices are rising, what’s happening with rental prices? Perhaps surprisingly, not as much. Or at least they’re not inflating as much as house prices. In many areas of the United States, a medium-sized property is cheaper to rent than to buy (per the ATTOM study). Studios, apartments, townhouses, and the like were found to be the most affordable rental housing.
What the Stats Mean for People with Houses to Sell
Overall, it’s a good time to sell a property because there is a demand for homes and going prices are brisk. The pool of homes on the market is at its lowest in years, with only 1.55 million properties for sale. The inventory of U.S. homes for sale was only lower in December 2017, with 1.47 million.
Although fewer people in 2019 can afford to purchase a home than could in years past, there is still a demand for properties, and this makes it a seller’s market.
In this vigorous market, many homeowners choose the traditional route to a home sale by utilizing the services of a real estate agent. In cooperation with the agent, they will look at other similar homes that have sold, set a price, list the property, market it, entertain offers, and then (ideally) go to the closing table and walk away with a nice check.
Other homeowners choose to skip the whole “normal” sales route by short-cutting the process and letting a home buying company purchase their property. This route bypasses repairs, showings, open houses, and inspections. Homeowners simply request an offer from a home buying company, say yes to the price, close, and get a check.
We Buy Houses Austin is such a buying company. We buy houses as-is in Austin, other cities in Texas, and even in other states. We make life easier for many homeowners by making a fair offer on their property and not requiring any prep work or inspections. Once our offer is accepted, the track to the closing table is speedy. This is a great option for homeowners who either need to sell a house quickly or don’t want to jump through the hoops of selling it through a realtor.
What the Stats Mean for Investors Who Buy Properties
Since the demand for affordable housing is high, and many people are finding that renting is easier on the budget than buying, it is a good time for investors to purchase rental properties.
As with housing prices, rental prices vary widely depending on location in the country. High rental rates occur where housing prices are very high: southern California (especially near the coast); the Washington, D.C. area; and many parts of Hawaii. The lowest rentals in the country can be found in parts of Tennessee, Illinois, and Ohio (findings by BiggerPockets, a real estate investor community).
At the End of the Day
In the United States in 2019, the American dream of home ownership is out of reach for many people. Mortgage rates and housing prices continue to rise. However, some say the market is starting to cool and settle. Zillow economist Aaron Terrazas says that stabilization is happening across all consumer sectors—buyers, sellers, and renters. While home ownership is still just a dream for many, for those who can indeed buy, they will have more time in the cooling market to look around and pick and choose thoughtfully.