Blog posted On February 12, 2019
After years of stagnant wage growth, many Americans are starting to see a bump in their paychecks. In December 2018, the Fannie Mae Home Purchase Sentiment Index found that 24% of Americans reported their incomes were higher than one year ago, the highest jump since June 2010.
Employment data points to the tightest labor market in decades. The unemployment rate and jobless claims continue to hit historic lows and job openings continue to grow. Employers struggling to attract workers may be offering higher wages to compete with other companies. Additionally, the Tax Cuts and Jobs Act passed in late 2017 was the most sweeping tax reform since the 1980s. Among the changes, was a cut to corporate tax rates, giving employers an opportunity to pass on the savings to employees.
How will higher incomes impact the housing market?
With wages on the rise and home price appreciation beginning to slow, some home buyers may have more buying power. Fannie Mae survey respondents expect home price appreciation to slow to a rate of 2.5% in 2019, which is unlikely but not entirely off track. The latest figure from the Case-Shiller home price index reports home prices were up 5.2% annually in November compared to November 2017’s 6.2% rate of annual appreciation. Home buyers who have been competing with rapid home price appreciation for much of the past few years will find a slight break in most markets.
Even with positive conditions like higher wages and slower home price growth, this year’s housing market is expected to remain competitive. Housing inventory is tight in many markets across the country. Prospective buyers looking to make an offer this year should get preapproved for mortgage financing before they start shopping. Mortgage preapproval shows the seller you are serious about your offer and you’re ready to move forward with the financing process.
CMG Financial takes mortgage preapproval a step further with our TBD-underwriting. Starting the underwriting process early ensures there will be no surprises when it’s time to close on your mortgage loan. By the time you are preapproved, the only thing we will be waiting on is your home appraisal. Working with the right lender matters, especially in a busy housing market. Ask me about our quality preapprovals today.