Is it a good time to buy a home in 2019? It just might be. It might also be a good time to sell.
This morning, Fannie Mae released its March 2019 Home Purchase Sentiment Index, which is a composite index designed to track consumers’ housing-related attitudes, intentions and perceptions, using six questions from the National Housing Survey.
“While we don’t formally use this index in our forecast yet, because the housing market hasn’t gone through a full cycle since we began the index in 2011, in any instance where our housing forecast has been wrong, this index would have moved us in the right direction,” said Doug Duncan, Chief Economist of Fannie Mae.
Each month, the survey asks whether it’s a good time to buy a home or sell, whether home prices will go up in the next 12 months, whether mortgage rates will go down, what level of confidence consumers have about not losing their job in the next 12 months, and whether their household income is significantly higher than 12 months ago.
The results for March show a surprising jump in optimism, which Duncan acknowledged could be coming from the dramatic reduction in mortgage interest rates. (Mortgage interest rates fell last month to around 4 percent for a 30-year fixed, which was the most dramatic dip in almost ten years.)
Overall, the Home Purchase Sentiment Index rose 5.5 points from February 2019. That’s good if you want to buy a home. But there was another surprising result from the survey as well.
One Reason Why It May Not Be A Good Time To Buy A Home
Overall, the Home Purchase Sentiment Index rose to an overall level of 89.8 in March. Most of the increase can be attributed to increases in all but one of the components: Good time to sell (+13), Good time to buy (+7), Mortgage rates will go down (+7), home prices will go up (+5), and Household income is significantly higher (+2).
The survey found that one component decreased (albeit slightly): Confidence about not losing job decreased by -1.
“Those who said it’s a good time to sell the number one reason was ‘house prices.’ When asked if it’s a good time to buy those who said it was a bad time a buy, the number one reason was ‘house prices’,” Duncan said. “If you own a house, and have equity in your house, it’s a great time to sell because home appreciation has been so strong (over the past few years), even if it’s slowed.”
So If It’s A Good Time To Buy in 2019, Where Should Buyers Look?
Virginia Beach is the best place to buy a home in 2019, according to recent research by Owners.com, a tech-enabled real estate brokerage.
The reason it’s good for home buyers is a combination of factors, including how long properties sat on the market and at what discount to their list price buyers were able to buy them. Homes on average sold for 3 percent below their listing price in Virginia Beach, likely because homes were on the market for 51 days longer than the national average, which is 60 days.
The Rest of the Best Places to Buy A Home in 2019
Hartford, CT, is the second best place to buy a home. Homes similarly sold for an average of 3 percent below their listing price and had an average of 110 days listed on the market. Philadelphia, PA, Orlando, FL, Tampa, FL, Cleveland, Jacksonville, FL, Miami, Chicago and Pittsburgh round out the top 10 best places to buy a home in the U.S.
Where Is the Worst Place to Buy A Home?
San Jose is the most overheated market in the U.S, based on metrics that weighted percentage of household income used toward mortgage payments, days the home was on the market and the average price difference between sold and listing prices. The average median sales price for single-family homes in San Jose is an unbelievable $1.3 million.
California claimed 9 out of 10 of the spots on the top 10 most overheated markets in the U.S. (San Francisco, Santa Cruz, Los Angeles, San Diego, Santa Rosa, Napa, Oxnard and Salinas). As unfortunate as it is, I’ve previously covered how tech hubs have contributed to the affordable housing crisis in San Francisco and the greater Bay Area.
Boulder, Colorado was the only overheated housing market outside of California. It placed seventh with average median sales prices for single-family homes at $560,000.
“Affordability remains a challenge in many markets across the country, but there are still areas where buyers can find affordable options,” said Dario Cardile, Vice President, Growth at Owners.com. “Smart buyers should look to work with a brokerage that offers the support of experienced agents together with personalized tech-based tools that can help them find the right home, at the right price for their budget.”
The Best Place to Buy A Home For You
Studies like these are interesting, but it’s not the reason you should buy a home in a particular place. The best place to buy a home depends on a lot of other factors that can’t be analyzed as easily as these numbers. If you have a family, you’ll want to consider school districts. Maybe you work in a field that requires recertification when you relocate, if so, you’ll want to take those costs (and potential job opportunities) into account before making a big move. If you travel a lot, proximity to an international airport might be an important factor. And so on.
The best place to buy a home is really where favorable market conditions meet your family’s unique needs.