As home prices continue to rise, there may be a shift on the horizon. Will buyers finally gain momentum and move forward, or are sellers at risk of stagnation? We maintain high editorial standards to assist you in making informed decisions. Please note that some links in this article are sponsored.
The dream of owning a home feels more distant than ever, with prices steadily increasing year after year. Many buyers struggle against this trend, unsure if they will ever catch a break. In January, the S&P CoreLogic Case-Shiller Index indicated a 4.1% year-over-year increase in national home prices. February saw no respite, with the National Association of Realtors reporting a 3.8% annual uptick in existing home costs.
Is relief finally in sight? Signs suggest that housing inventory is on the rise, potentially leading to a decrease in home prices. Major real estate entities like Fannie Mae, the Mortgage Bankers Association, and the NAR anticipate a slowdown in home price growth by 2025, which may favor buyers but should be noted by sellers as well.
Why might buyers benefit? One major factor contributing to high home prices is limited supply. The NAR reported a 5.1% increase in housing inventory from the previous month in February, with a 17% rise year over year. This surge in supply could help stabilize or even reduce home prices. Additionally, falling or stagnant mortgage rates and the Federal Reserve’s announcement of a steady overnight interest rate may further impact the market dynamics.
However, ongoing recession concerns could lead to declining home values for sellers needing to make immediate sales. While this may create opportunities for buyers, it could also result in a slowdown in the housing market as potential participants await economic clarity.
Homeowners should consider preparing for these potential changes. While a drastic drop in U.S. home prices is unlikely, the gradual normalization of housing inventory suggests a shifting landscape. Factors like tariff policies could exacerbate economic uncertainties, affecting homebuyer demand and property values. Homeowners, particularly in major employment centers, may be better insulated from these impacts but should remain vigilant.
By leveraging the average $311,000 in home equity held by U.S. homeowners as of the third quarter of 2024, homeowners can proactively address potential market fluctuations. One option is to pursue a home equity line of credit (HELOC) to capitalize on existing equity and safeguard against economic downturns. Unlike a home equity loan, a HELOC offers greater flexibility and could be a strategic financial tool in uncertain times.
Homeowners can access funds as needed instead of making immediate installment payments. Depending on your home value and remaining mortgage balance, you may be able to borrow funds at a lower interest rate from a lender through revolving credit. By consolidating multiple bills into one easy payment, you can experience less stress, reduced fees, and potential long-term savings.
LendingTree’s marketplace connects you with top lenders offering competitive HELOC rates, simplifying the process of comparing offers in one place. Selling your home now can depend on your situation—locking in a higher sale price before price drops or moving to a new property with potentially higher mortgage rates. Mortgage Research Center (MRC) helps you compare rates and estimated monthly payments for a new mortgage from multiple lenders based on your basic information.
Investing in the real estate market can be an alternative to selling your home, with Homeshares offering a U.S. home equity fund for accredited investors to gain direct exposure to owner-occupied homes without the hassle of property ownership. With a minimum investment of $25,000, Homeshares can provide risk-adjusted target returns ranging from 14% to 17%, offering a low-maintenance alternative to traditional property ownership.
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