Will this be the “Fall to Remember“? Will the trend of an improving housing market reverse itself? This fall season could prove to be treacherous for home sellers. Even worse, the impact of the war in Syria, economic turmoil in emerging markets, mortgage interest rate increases, and the central bank’s Policy in the U.S. , could reverse the trend towards improving real estate market conditions.
Listed below are 8 major concerns for Home sellers that could upend the improving Real Estate Market:
- Interest Rates – Experts believe that rising rates will decrease buyer demand for housing. The Federal Reserve chose to extend their $85 Billion monthly bond-buying program, at least for now. There is significant concern about what will happen once bond purchasing activity is reduced. The central bank already suggested a reduction on two separate occasions. Both times the stock market dropped by almost 5%.
- Price Appreciation – Prices have increased recently at the fastest pace since 2006, over 12% in the past year according to the S&P/Case-Shiller Index. Many experts believe appreciation is excessive and can’t be sustained when income is flat, unemployment still high and credit is tight. Yet, many homes sellers are delaying their purchases in anticipation of continued appreciation.
- Recent Sales – New home sales plunged by 13.4% in July, according to Lawrence Yun, chief economist for The National Association of Realtors. Loan originations have already dropped nearly 30% in the 3rd quarter, when compared to last quarter, according to Tim Sloan, CFO at the largest U.S. mortgage lender, Wells Fargo.
- Buyer Pool – Rising interest rates along with increasing prices, have already reduced housing affordability.
- Political Gridlock – With passionate positions evident on both sides of the aisle regarding:
- The implementation of Obamacare that is schedule to begin next week
- The U.S. Budget issues, a fight is already in progress which could delay passage and shut down large parts of the government on October 1st
- The Debt Ceiling, which is due to run out in mid-October (The last fight in 2011 cost the U.S. its AAA credit rating.)
- Possible Currency Crisis – Cheap money in the U.S. has wreaked havoc on countries in Asia and emerging markets in Brazil and India, where currencies have plunged.
- Conflict in the Middle East – The U.S. Policy towards the Syrian conflict and continued concerns about stability in the entire region
With the myriad of issues that could impact housing prices, the best way to sleep at night is to sell when everyone else is buying!