It therefore seems a good time to look ahead at prospects for the second half of the year and we thought a good way of assessing future possibilities would be to carry out a SWOT, or Strengths, Weaknesses, Opportunities and Threats analysis, based on what we've seen in the first six months of the year.
Strengths - With the news at the end of last week that they are now nearing multi-year lows, mortgage rates continue to be one of the main motivations for buyers. While there's no guarantee of the very welcome downward trends continuing, there's equally no clear sign that current trends are going to change significantly in the short term. Remember also that even if the Federal Reserve raises interest rates during its current meeting (by no means a certainty) or at any time in the coming months, this won't be likely to have an immediate and direct effect on mortgage rates.
Locally, we have seen steady year-on-year home price increases during the first half of this year and, with demand remaining high and inventory of available homes still sluggish, there's every sign that this pattern will continue.
Weaknesses - We just touched on it, but low inventory has to be viewed, overall, as a key weakness in our market, and many others by the way. While unquestionably great news for sellers, this can lead to reduced choice for buyers, who may struggle to find the exact home match they want. Improving home supply is one of the major challenges facing our local real estate industry - needless to say we are all working hard to make this happen.
It would also be fair to acknowledge that current buyer sentiment is quite dependant on the continuance of low mortgage rates. The good news here, however, is that higher mortgage rates have been predicted for a few years now and, despite one or two relatively minor rallies, they have stayed very attractive. They will rise eventually, that is certain, but in terms of looking ahead to the second half of the year there are even suggestions that they could fall even further. Remember, though, that situations can change very quickly.
Opportunities - Without question, and somewhat ironically, the biggest opportunity in the market is also its major weakness. Low inventory means less competition, enabling sellers to hold prices, or even receive multiple offers above the asking price. There was a brief suggestion of a slight turnaround in inventory during the spring, but recent statistics suggest we still have a long way to go. If more sellers listed their homes, it would undoubtedly help the market as buyers would doubtless respond positively to having a bigger selection of homes to pick from.
Threats - As ever, the biggest threat to the market has to be the unpredictable world we live in. We've noted many times in this blog how even distant international affairs can have a very direct effect on things like mortgage rates, although this can often be positive, as mortgage rates tend to drop when there is an atmosphere of risk aversion. Nonetheless, in a world where change happens literally at the speed of light, it's simply not possible to be totally confident of sudden, unforeseen events adversely affecting real estate.
Consumer confidence is also a fickle matter and, with disappointing jobs news lately, it's to be hoped that buyer sentiment doesn't begin suffer in the medium to long term. While there are no alarm bells sounding over jobs at the moment, we should all be hoping for a quick turnaround, back to the progress in job creation that was being made, until quite recently.
And, as if we could forget even if we tried to, there is an Presidential election in November and while this hasn't had any apparent effect on the market to date, it will be interesting to see if this changes as the race for the Whitehouse goes into overdrive after the party conventions next month.
Conclusion - So, having undertaken this quick analysis, how should we view prospects for the next six months? The really good news is that, at the moment, there are no intelligible signs of a u-turn from the incredibly vibrant market we've enjoyed in the Albuquerque area all year. Our advice steadfastly remains the same, however - don't make the possibly huge mistake of playing a waiting game for even better times ahead. Things rarely, if ever, get better than they are right now, taking the situation as a whole.
Why not call us today to discuss how to take advantage of this great market, whether selling or buying, or indeed both.