Citing “supply and affordability constraints” for keeping would-be homebuyers out of the housing market this past spring, National Association of Realtors (NAR) chief economist Lawrence Yun predicted summer would provide a “true test for the housing market this year.”
Although spring home sales volumes were relatively low, Yun said he expects a healthy economy and solid job market to keep many would-be buyers looking during the summer. According to the NAR Pending Home Sales Index, which predicts contract signings and closings, the buying season will likely post lower numbers in 2018 than it did in 2017. This could mean there is still hope for sellers, however, since “inventory shortage is the main culprit” for the weak sales numbers, said Yun. “Any rise in inventory would certainly help,” he added.
Every housing market is unique, but there are several national factors affecting most markets throughout the U.S. They include:
- High homebuyer demand for homes
- Rapidly rising home prices
- Income growth that is not as fast as home price growth
- A shortage of housing inventory
As more homeowners decide to remain in their current homes rather than selling and trying to find a new home or afford a more expensive one, home equity loans are on the rise. Although applications for home equity lines of credit (HELOCs) fell earlier this year over concerns that homeowners might no longer receive tax deductions from the interest on these loans, it appears that demand for HELOCs, often used for home improvements, is on the rise once more.
While many homeowners are using HELOCs for traditional purposes such as emergency funds and home improvements and repairs, nearly 8% of homeowners taking out these loans say they are using them for investment properties or “other investments.”