The national housing market has suffered a slowdown in recent months. Falling home prices, zoning restrictions, high interest rates, inventory shortages, and new tariffs are bringing builders, buyers, and sellers to a standstill.
The Federal Reserve has been steadily raising interest rates in hopes to keep inflation under control. There has been an almost two percent spike in interest rates since 2015 and mortgage lenders are expecting the acceleration to continue into 2019 . Buyers are now saying they can’t obtain a loan as easily and sellers can’t afford to move to a new home with a new mortgage. Furthermore, many single family homes that were bought during the recession turned into rentals, majorly stunting the urgency for home buyers.
Zoning costs and restrictions in places like Boston and Denver are plaguing both residents and business owners. The goal of these restrictions are to ensure safety, environmental preservation, and aesthetics; however, according to a recent article in The New York Times, “Restrictive zoning makes it hard to build denser developments that make cheaper homes profitable for builders.”
In addition to zoning cost, new tariffs imposed on a number of goods are making building more expensive. Prices of everyday items such as aluminum, rubber and glue, to tempered safety glass, windows and cable have seen a 10 percent increase in consumer price. Because of tariffs on lumber and other products, labor costs are rising too, especially for skilled trade workers.
Even with high interests rates and an under-supplied market, another 2008 crash isn’t predicted in the foreseeable future. Ralph McLaughlin, chief economist at Veritas Urbis, compared data from prior market recessions to today’s market and predicts stagnate home price growth for a year or so but not another housing bust. Lakshman Achuthan, Co-Founder of the Economic Cycle Research Institute, also reports that the the housing market is flashing us its yellow warning light, but we’re not witnessing another housing bust.
Overall, the current housing market is not in favor with the buyer. While Zillow has reported a nearly 20 percent reduction of housing prices in some major cities, it seems the majority of sellers would rather sit on their homes than be buyers in this climate.
SOURCES AND OTHER RELATED ARTICLES HERE: