A number of housing trends may harm the ability for Americans to currently buy a new home and move away from their old one. Renovations might be the secret to allowing individuals to take advantage of modern amenities while also keeping their homes off the market until the time is right.
The American housing market 2019 will be a particularly interesting one. Individual Americans will be forced to deal with the aftermath of trends such as rising home prices, rising interest rates, and continually improving economic growth. As a result, many Americans will be confused as to what exactly to do with their homes. But in many instances, Americans will most likely be better off improving their home value by renovating the home that they already own. Home renovations will help you realize the value of their home if they are not particularly interested in moving while conditions are particularly ripe.
Perhaps the strongest economic trend for the housing market in 2019 will be the level of interest rates. Interest rates had been stuck at or around zero for several years after the beginning of the Great Recession. Low interest rates from the Federal Reserve meant that mortgage rates dropped precipitously as well. Mortgage rates hit some of their lowest levels in history.
These low rates helped to provoke a massive amount of buying and building homes across the country. Ever since the midpoint of this process, certain areas have seen a considerable amount of growth and success. Millions of cheap mortgages have proliferated across the country. The Federal Reserve has noticed these trends and has responded by raising interest rates. Increased interest rates help to slow the economy and also curb inflation. They are essential to preventing the economic malaise that took over the country throughout the 1970s.
But at the same time, higher interest rates help influence calculations that people may make about buying or selling a home. Buying and selling a home is a process where individuals work with real estate agents on margins. They look at their income, the cost of a home, and the money that would be behind a potential mortgage. A higher interest rate will cause many of these people to determine that they simply do not have enough money to buy a home in the neighborhood that they want to live in. It will lead individuals to wait several years to purchase until they have enough money to spend.
Economic growth has been one of the primary drivers of higher interest rates. The economy has continued to grow month after month. Companies are spending more on capital and paying their workers more. New businesses are opening up around the country every week. This trend leads to more money in the pockets of Americans and more stable incomes. Americans want to make large purchases since they are no longer terrified that they could lose their job at any moment.
One would think that the resulting effort to increase interest rates by the Federal Reserve would completely tank the housing market. It makes the mortgages that pay for homes more expensive and adds yet another incentive for a person to remain a renter. Such fears have led to recent worries in the stock market about the future viability of American companies. However, the Fed has raised interest rates so slowly that the increased mortgage rates have not dampened the enthusiasm to buy a home. In fact, wage growth has increased in a way that has offset any increases to the average monthly payment for a home. There is also the psychological aspect of economic growth and how it leads to home ownership. The millions of individuals who moved home after college because they could not find a job now desperately want to buy a home of their own.
The impact of renovations
Renovations are an important aspect of the housing market for a number of reasons. First, they may be helpful for people who already own their own home and are not looking to move anytime soon. If an individual waits and then looks for a house, interest rates and demand may make buying a home particularly difficult. An individual may also currently have the money to cover renovation expenses when they would not have otherwise. Economic growth means more disposable income and a higher salary over a longer period of time.
There is the possibility that a person looking for renovations may have more options as well. High economic growth means that more and more individuals start businesses in different areas. Some of these areas include fields essential to renovations such as flooring, carpentry, and bathroom remodeling. More competition means a better quality renovation at a lower price. This lower cost may help an individual lean towards renovations when they are performing a cost-benefit analysis between renovating and moving.
In addition, there is a benefit to investing in home renovations now and then holding onto a home for a short period of time. Individuals may be rewarded for their patience and their prudence. There is a possibility that rising interest rates will tank the housing market and ruin the chances of an individual to sell their home in two or three years. Individuals who do not want to sell right away and increase their home value by renovating instead will be in a prime position when the market inevitably improves.
Americans are understandably worried about the future of the housing market 2019. The home is the largest purchase that a vast majority of Americans ever make. It is where their wealth and equity has been saved up over a number of years. These individuals know that one mistake in the buying or selling process could cost them thousands of dollars. But these individuals also need to realize that there is another way. There are other steps they can take outside of simply buying and selling a home that would make that home more valuable. Any individual who is scared or uncertain about the market and still wants more out of their home life should certainly consider renovations as an option. Renovations may be the life choice that they need to ensure the eventual highest value for their home.