Home price appreciation is slowing down while mortgage rates are going down and many believe this means the market is reaching a peak. According to the latest ValueInsured Modern Homebuyer Survey for Summer 2018, 63 percent of American homeowners believe there will be a price correction in their area within two years. This is the highest level recorded since Spring 2016.
According to the survey, around 54 percent of respondents believe rising mortgage rates will result in the stunting of the housing market, triggering lower home values. Another 33 percent of respondents believe new tax laws, which could result in decreased tax credits and make homeownership more expensive, resulting in lower prices. Meanwhile, 16 percent believe a home price correction in their neighborhood will follow the next stock market correction, and 11 percent the ramping up of the trade wars will impact the value of their homes. Current;y, the 30-year fixed mortgage rate is at 4.78 percent and 58 percent of all Americans believe it will rise above five percent by 2019.
ValueInsured notes that while it is reasonable for American homeowners to tie the rising mortgage rates could impact home purchases, especially given historically low mortgage rates.
According to ValueInsured, 44 percent of Millennials interested in buying a home in the near future believe new tax laws to be the main drive behind home value decreases.
According to the survey, this may be attributed to the high concentration of millennials in coastal cities, where tax laws are most likely to impact housing markets. New York City, in particular, has already seen tax laws negatively impact demand and home prices.
On the West Coast, in California, 44 percent of all homeowners, not just millennials, believe new tax laws will decrease home prices as well. Back east, 49 percent of Connecticut residents and 58 percent of New Jersey residents believe the same thing.
“This is not far-fetched as many homebuyers are already stretched so thin in what has become one of the most unaffordable housing markets in the country,” says ValueInsured.