Happy new year from the Wethman Group!
January started once again with a bang as serious buyers came out from the holidays with resolutions to buy, and started their home searches well before the “spring season.” We typically see an increase in buyer showings and offers right out of the gate in January, and this year is no exception. Inventory shortages remain and buyer motivation is strong in our area, despite the shutdown.
Katie was featured on NBC4, sharing her take on the Amazon announcement and what that means for renters, buyers & sellers in the DMV. Check our her interview HERE!
What does the government shutdown mean for sellers/buyers?
So far, in our area, we aren’t seeing a *significant impact* on the market; but it’s early in the year, and our buyer demand has been strong enough to absorb any slack caused by buyers dropping out of the market.
According to a National Association of Realtors survey of over 2,200 members taken in January, over 75% of members saw no impact to their clients’ contracts or closings. A smaller amount, only 11% of members, noted that they saw an impact to their current clients, and an additional 11% reported an impact on their potential clients.
Interestingly, clients that decided to delay their home purchase made their decision based on the current economic uncertainty, even though many were not furloughed federal employees.
FHA/VA loans are also not seeing as much impact during the shutdown, as HUD had a contingency plan in place. There could be marginal delays in processing due to under staffed offices, but most are operating.
2019 Market Predictions
Interest Rates: Rates are widely expected to continue their general upward trend. The FED increased interest rates three times in 2018, but have been on a recent (temporary?) decline. While interest rates may slow down real estate markets in other areas, the DC Metro area won’t feel the impact as much given its diverse buyer demographic and transition of government, military and contractors every few years. There might be a slight slow down in home sales, but that is likely due to lake of inventory available to current home buyers.
Inventory: In the DC Metro Area, inventory will remain low, especially for townhouses and lower priced single family homes, and especially close in (NW DC, Arlington, Alexandria, Falls Church). This inventory crises has been in place for some time, and is not due only to the Amazon hype. In fact, we are not expecting Amazon to bring a significant impact to the area this year, as many of the jobs are being hired from the local talent pool, and will be phased in over 10+ years. See our previous Amazon analysis and predictions. Nonetheless, we expect our existing inventory shortage to continue to worsen, especially in price points from $450k-$1.2M.
Tax Law Changes
As we enter tax filing season, don’t forget that new tax brackets and tax rates were passed late last year, and there are a host of changes, especially for homeowners. The standard deduction amounts have nearly doubled, making itemizing less beneficial, and the personal exemption amount has dropped to $0. State and local tax (SALT) deductions are now limited to $10,000 which is a real hit in our area. Mortgage interest on the first $750,000 of debt is still tax deductible, but HELOC interest is only deductible to the extent it was used to improve a primary residence, and Private mortgage insurance (PMI) is no longer deductible. Consult your tax adviser for details.
Rates have remained mostly steady the past month:
30-Year Fixed 4.37%
30-Year Fixed VA 4.37%
15-Year Fixed 3.87%
FREE Home Buyer Webinar
We’re hosting a Home Buyer webinar on Feb 27 which will include an Amazon update, tax law update, and other factors to consider when buying a home.Click here to register.