Depending on which website you read you will read different theories regarding the current real estate market slow down we are going through. The crazy days when you bought a property at $500,000 and next day it sold at $5 million are over (yes, those numbers are an exaggeration, but you get the point). Those high appreciation days are no longer here and will most likely not happen again for a while.
The current yearly rate of appreciation is at 4% on a national level. This is a healthy and steady rate for real estate and where we want to be at (the normal average rate is between 3%-6%). Real estate was never meant to be something to get rich off quick. It is supposed to be a steady long-term investment.
Top cause of the real estate market slow down
Depending on who you ask you will get different theories but the main one we can all agree on is wage. There are also other variables such as interest rates, the economy, and the job market but wages are the most significant factor in these circumstances.
Therefore, wages are the biggest factor causing the current market to slow down. When you want to buy a home, the lender will ask you how much you make. This amount will help determine how much you can afford on a house. The higher your wage the higher the affordability. Increases in wages have slowed down.
What does this mean for the near future?
The expectation for the future of wages is that it will remain at a slow, steady pace of growth. Therefore, real estate will stay at a slow and steady pace of growth.
Once again, this is healthy and the norm for the real estate market. It is how real estate should act. Do not be discouraged or worried about the slow down. Prices are not coming down nor does it mean a recession is around the corner. Things are slow and steady and that is how it is supposed to be.
How will this affect you?
Question or concerns on how this market slow down will affect your real estate? Feel free to contact me. I will be happy to provide you with a free home valuation and answer any questions regarding what to expect on the value of your property.