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Published on 01/07/19 by Michael Moore


The past several years have been tough to describe concerning the housing market. Over all, we still have a healthy balance, but I see it tending toward more of a buyer's market in the months to come. 

A healthy market will see prices of properties gradually rise over time. We do have this in Louisiana, as we appear to be building equity around the 2% or 3% mark. This may be on the lower end of the scale compared to national trends, but it has it's gradual incline none-the-less. What has been happening over the past several years is; within the upward trend, the cyclical back-and-forth of going from a seller's market, to buyer's market has been coming and going faster than before. 

Why is this? Plenty of factors actually. The stock market has something to do with it. The President has something to do with it. And the housing market itself has something to do with it? Say what? Sure, it is all interlinked. 

The stock market has been more and more volatile over the years. The players are playing more aggressively, which causes the big peaks and valleys that are setting new records all the time. Stocks are way up, stocks are way down, tons of money thrown here, tons of stocks sold there...and these professionals know what they are doing the whole time.They have learned to turn this volatility to their advantage - a way to make more money, faster. 

So, when consumers watch the stock market go up and down so much, so quickly, they get nervous. The ones in the market for a house might think, "I had better wait to see what happens to the market, after all, I have enough stocks myself and I don't know what's going to happen to them."  Well, no one truly knows, and this is why so much is being shifted around so fast, causing the peaks and valleys.

Consumers in the market for properties start to get used to the volatility and eventually feel comfortable buying because they realize the housing market is not necessarily being affected by the stock market.

What about the President? Well, he is shaking things up and many people do not know how to react to him or understand how his policies are going to affect consumerism, the stock market, the housing market, the health sector, and more. Stock players and consumers see tariffs renegotiated and they panic. They don't know what's going to happen, so they wait for a spell to see how things shake out. They see that everything is going to be ok, then they reengage. 

Then there is the housing market itself. People learned a lot from the big Crash about 10 years ago. Buyers are not snapping up any house that gets listed because equity is rising at an incredible and unsustainable rate. Now, there is a reasonable gain each six months or a year and buyers know they are going to be keeping a property longer than several months. Also, interest rates have climbed up a little bit. They are historically still very low, so we have nothing to sigh about there. Yet, each little bit on the mortgage payment means a lot for first time home buyers, which is still a large part of the market. Millenials home buyers are still on the rise. 

The flow of investor money has something to do with it too. In the past three or four years saw flippers making good money as they bought, refreshed, and sold properties at an good profit. Last year some time, this almost came to a halt. As I talked with agents, I found that there was not the same equity to be had after a remodel. The base price for the wholesale property had climbed up, materials and labor climbed up. This made it harder to turn an acceptable profit.

Also, there are only so many investors with the cash on hand to make flips happen. A glut of investors can blow through a town, make their money, remodel most of the downtrodden properties, then move on to greener pastures. Flips still happen, but much less often, and many time by smaller players who are testing their hand at flipping. New home builders are also more cautious, as the market naturally goes through cycles of supply and demand. 

The inventory of acceptably priced properties can be short, which causes builders to build more new homes. When their inventory has saturated the market again, prices fall. When most of the buyers who could buy did buy, this slows things down also. The market flat lines for a while, till something shakes it up again. 

These shake ups have just been coming and going more often now adays. Of course, this is an overly-simplified explanation of what's going on, but there is enough truth in here to make for good conversation. 

Basically, if you are a seller or buyer - you don't have anything to fear. It is still the right time to sell or buy right now! I am here to help you maximize your potential for whatever you are looking to accomplish Give me a call soon! Happy to come right over and talk about the possibilities. 

 


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