There’s no doubt about it: the 2018 housing market has seen its ups and downs. The year started with super high home prices, historically low mortgage rates and a definitive upper hand for sellers. In recent months though, home price growth has slowed down, rates have risen to their highest in nearly eight years, and favor has started to shift from seller to buyer. I’ll explore my thoughts below on whether you should rent vs. buy.
So the questions we are asking are:
- Will these trends continue?
- How has the recent natural disaster impacted the area in terms of the real estate market
- As a military family, what is the next move?
- Rent VS. Buy?
What is the Next Move?
Well, it is believed from the real estate and economic professionals that the interest rates will continue to rise. However, it is expected that there will be a surge in demand from the millennial generation. Rising rates make the housing options less affordable thereby deterring some potential homebuyers but on the flip side the largest group of millennials will be turning 29 next year. Which is the peak home-buying age. In addition, based on a statistical study done in 2015, the U.S. Military has grown older in the last 40 years. Making the average age of roughly 2/3 of all DOD active duty members are 30 years old or younger.
So what does all this mean? Well, according to Danielle Halle, Chief economist for Realtor.com “Millennials will continue to make up the largest segment of buyers next year, accounting for 45% of mortgages, compared to 17% of Boomers, and 37% of Gen Xers. While first-time buyers will struggle next year, older Millennial move-up buyers will have more options in the mid-to upper-tier price point and will make up the majority of Millennials who close in 2019. Looking forward, 2020 is expected to be the peak Millennial home buying year with the largest cohort of millennials turning 30 years old. Millennials are also likely to make up the largest share of home buyers for the next decade as their housing needs adjust over time.” So as a military service member moving to a new duty station, if your thinking of buying, you may want to think twice. Depending on the area you PCS you may end up finding that you will not be able to make much of a profit on a home in the typical 2-3 years you are at a duty station. Since the interest rates are higher and prices are also going to move up much slower than we have seen in many years you will not be able to turn much of a profit in that short time frame.
Impacts from Hurricane Florence.
In addition, another thing to consider when evaluating the real estate and rental markets of the area is the impacts to Eastern North Carolina from Hurricane Florence. After the storm many areas have suffered damage that will take years to recover from, if not decades. There is now a housing shortage as some entire neighborhoods were completely destroyed. As new construction is booming, especially in Apartment complexes, the home prices are high and rental prices are also increasing. So if you currently own a home in the area and are leaving it you may be able to now get a higher rent. But, post-storm insurance adjustments and tax increases you may be paying more for it also.
The Bottom Line.
So what is the bottom line? What does this mean for you? If you are a military family PCSing to the area first thing you should do is simply evaluate your individual situation. If you think you will be in the area for a long term and are in the Millennial demographic you may be able to find a good long-term investment opportunity in the area. The reality is Coastal North Carolina will always be a desirable place for people to live, work, and retire. So with the stability of a military career you could use the area as a real estate investment opportunity. But, if you think you will be in the area short term and are looking to flip a property in a couple of years, I would really think twice due to the forecasted real estate predictions of higher prices and higher rates. If you own a property, now could be a good time to rent out your property due to the housing shortages. Lastly, if you are renting you may find yourself spending more, as rental rates will also rise. So evaluate your situation and make the best decision you can based on your individual needs.
I hope this information will help you in your next PCS move!