Housing Market Slowing

The real estate market in Pittsburgh as well as nationwide, has been hot! Everyone is out buying. This includes investors, developers, and of course families buying their dream homes. This has been mostly from solid economic environments as well as lower interest rates making it less expensive to finance a property.

Over the past year there has been some significant changes. Here is a list of indicators that the housing market may be slowing...

1. Days on Market

Luxury markets especially like New York , Los Angeles, and Miami have seen a massive increase of properties being listed on the market and not selling. The days on market is how long the property has been listed without going under agreement. The luxury market is always the first to get hit before the rest of the economy follows. This is because when a recession is on the horizon, or debt gets too high within households, the first thing that is cut is unnecessary luxury spending. It is also the smallest segment on the market that can afford to own multi million dollar housing.

2. Interest Rates Not Having An Effect

In the past, when interest rates dropped, this would incentivize the buying craze to expand even more. The rate at which you can receive a mortgage dictates the monthly payments. As these payments decrease, the amount of real estate you can afford generally increases. Since the recent rate cuts, there hasn't been much impact on the buying. In fact the only transactions that have increased are refinancing. This is when a homeowner swaps out their existing mortgage for a new mortgage at a lower rate. This is showing people are more interested in staying in their existing home as opposed to buying a newer or more expensive home.

3. Global Conflict

We now live in a global market. Trade, jobs, technology, interest rates, and opportunity are all world wide. When nations like the EU have conflict, trade wars with China, negative interest rates in Japan, war in the middle east, these all stirred up problems for growth. This on top of a global debt problem have caused consumers to fear upcoming recession. With the fear of possibly losing their job or lower income, the last thing consumers do is pile on more debt with large purchases.

While there is not guarantee we are headed for a recession, and by no means is the housing market going back to the days of 2008, there are many signals that the market is slowing. This can cause deflated prices, lower interest from buyers, and possible defaults on mortgages. It is always smart to work with the market not against it. If buyers seem to be leaving the market, it most likely means the demand is fading and prices will go down on real estate. In the Pittsburgh market, the prices tend to fluctuate less than larger cities and luxury markets. This could also be a prime time to sell your house before there are further recession issues.