Since the crash and recovery in 2008, housing prices have climbed by an astonishing 52% in just one short decade. Thanks to fixed rate loans intended to help the suffering housing market just after the recession, home buyers and sellers have benefitted from a thriving market. All that may change in 2019 — read more to learn key predictions for this current year’s housing market.
Market inventory saw a record low in the winter of 2017 and has not yet climbed back to its previous numbers. Many buyers struggled to find a property that fit their criteria and budget. Often times, when a viable house was discovered, someone had seen it first and bidding wars ensued.
The tide may be turning but too slowly. 2019 may see an increase in inventory in certain areas but won’t benefit from new construction, as home building companies face tough tariffs. Some sites report that inventory is expected to rise by 10-15% over the year. However, this influx of inventory won’t completely benefit first-time homebuyers or low-income buyers. This percentage increase references homes in the mid to high price ranges, meaning inventory remains lower for starter homes.
Traditionally, many first-time home buyers picture their initial real-estate investment as a three-bedroom, ranch-style house on a shady lot in a friendly neighborhood. However, rooting down in one of these properties comes with the compromise of leaving urban center, giving up public transportation, and saying goodbye to big-city amenities and lifestyle.
Many millennials are unable to afford to move away from their jobs in order to acquire a starter home and still others who are able to leave metropolitan areas behind them, can’t save up enough for a down payment on a $250,000 home. 2019 expects to see an increased purchase in townhomes and manufactured homes, which are definitely less expensive than existing single-family homes.
Rising Mortgage Rates
While there will be a surplus of varied inventory, affording a home is still somewhat unattainable for certain buyers. Mortgage rates remained under 5% for the past decade and helped stimulate the housing market after the 2008 crash. However, these rates are already on the rise and are expected to continue throughout the year.
Many predict that mortgage rates will reach a 10-year high at some point this year, with some forecasting rates to hit 5.5% by the end of 2019. Housing values aren’t expected to slake off either which might have helped buyers overcome the increased mortgage rates. This makes it hard for first-time home buyers and low-income buyers across the board.
Slow and Steady
Home prices have increased tremendously over the last ten years and aren’t expected to fall off anytime soon. However, they are predicted to slow in ascension during 2019 and possible only gain 2% by the year’s end. In coastal markets, housing prices will level out but in the heartland, they could begin to increase significantly.
This change in market values could be helpful for those looking to purchase in coastal areas and for those looking to sell throughout the Midwest and Southeast. Both sellers and buyers can approach real estate transactions more cautiously in this forecasted slow and steady market and won’t be tempted or trapped by bidding wars.
Largest Purchase Year for Millennials
Millennials who have been waiting to purchase houses may be more inclined to do so during 2019. Even though mortgage rates are on the rise, inventory is aplenty and different home styles are increasingly trendy and affordable.
Following the recession, homeownership levels dropped to multi-decade lows but has slowly recovered over the past few years. Nearly 21% of US residents aged 18-35 say they plan on purchasing a home within the next year — contributing to the past year’s dramatic gains in the number of new homeowners 35 and under.
Even though the housing market is leveling off, inventory remains low, and mortgage rates are on the rise, now could be the best time to purchase or sell your home. Sellers would be more inclined to offload their property quickly because they’ll want to secure their new home before mortgage rates continue to climb. Enlist the help of a Clever Agent Partner to ensure a profitable, quick, and straightforward sale of your home.
Buyers also stand to benefit from many of these 2019 predictions. Inventory is lower, yet prices are dropping or leveling off in highly desirable areas. Bidding wars are less frequent since the market is cooling off and not all potential buyers are diving in head first. If you’re looking for your first home, your next rental property, or simply wanting to move up, speak with a local Partner Agent in your area to get started on your home buying journey.