For the past few years, there have been rumors that the real estate market was headed towards a crash. 2018 showed a significant slowdown in the real estate market, but is that any reason to worry about the year ahead?
Predictions for 2019 seem to be all over the place, but we found many top economists and financial experts share a few key predictions. If you were hoping to buy or sell in 2019, we’ll explain what these predictions mean for you and what next steps you should take.
Here’s what 5 top experts have to say regarding the potential of a real estate market crash in 2019.
1. James Stack - Investment Advisor & President of InvesTech Research
If the name James Stack sounds familiar, you might recall him as the financial expert who predicted the 2008 real estate crash. Stack saw the Great Recession before most others did and has since been able to accurately predict housing market trends.
Last year, Stack claimed that the housing market was headed for a slowdown, which turned out to be correct. Few experts agreed with Stack’s position when he made this claim last January, yet days after his predictions were published, real estate shares began to decline.
On January 7th, 2019, Stack announced that Americans should “expect home sales to continue on a downward trend in the next 12-plus months.” He continued on, stating, “And there’s a significant downside risk to housing prices if a recession takes hold.”
To sum up, Stack believes it will be a bad year for the housing market, although he admits it’s too early to know if housing is in a bubble, which could be a sign of an impending crash.
Final Verdict: “Housing could be heading for its worst year since the last housing crash.”
2. Lawrence Yun - Chief Economist at NAR
The National Association of Realtors has a different opinion than Stack. They believe home prices will continue to slowly increase and overall home sales will slow. They don’t predict the market will completely stall, just slow down.
According to Yen, “Home appreciation will slow down. The days of easy price gains are coming to an end, but prices will continue to rise.”
NAR predicts sales will increase 1% this year and the median home price will increase by 3.1% to approximately $266k. NAR also expects this to continue through 2020, with the median home price then rising to $274k.
Yen also noted that there appears to be a shortage of housing inventory available on the market today.
Final Verdict: “The forecast for home sales will be very boring - meaning stable.”
3. Danielle Hale - Chief Economist at Realtor.com
Realtor.com has a similar outlook for 2019. With mortgage rates rising and home prices increasing, they expect the real estate market to see an overall decline in home sales.
However, with this decline, they anticipate the housing price increases will also slow, increasing by only 2.2% over the next year.
They also expect mortgage rates to continue rising, averaging around 5.3% for the year and ending 2019 at 5.5%. This would mark an overall increase of 8% on the price of homes, overall.
Final Verdict: “We don’t expect a buyer’s market on the horizon within the next five years.”
4. Aaron Terrazas - Senior Economist at Zillow
Zillow also expects mortgage rates to continuing rising throughout 2019, though their predictions are on the higher end.
As the rates continue to rise, Zillow predicts 2019 will be a slow year for buyers and sellers alike. With fewer buyers, the demand for rental properties will increase, which could impact the market in years to come.
According to Zillow, increasing mortgage rates could reach as high as 5.8% by the end of 2019, with home values growing by 3.79%.
Final Verdict: “Rising mortgage rates will set the scene for the housing market in 2019.”
5. Daryl Fairweather - Chief Economist at Redfin
While Redfin agrees that 2019 will end with higher mortgage rates, they aren’t convinced it will be a difficult year for real estate buying or selling.
Redfin expects the housing market to remain cool for the first half of the year, with prices and rates increasing during the second half.
They anticipate housing price growth to fall from 5% to 3% and even anticipate prices could fall below 2018 averages throughout the year. Major metro areas such as LA, Portland, and Seattle should expect the largest price reductions.
As prices fall, Redfin predicts there will be a steady buying market in 2019, specifically for homeowners. According to Fairweather, 2019 won’t see as many investment purchases.
Redfin expects mortgage rates to end the year at around 5.5%.
Final Verdict: It will cost more to borrow, but more people will have access to credit for home-buying
What Does This Mean For Buyers and Sellers in 2019?
Although there are some disagreements amongst the top real estate experts, there are a few prevailing takeaways that all seem to agree will happen. Here are the main points you should pay attention to, based on financial experts’ predictions for the year to come.
Mortgage rates will increase. It’s unclear if they will steadily rise throughout the year, but they’ll be highest by the end of 2019.
While some experts argue that there will be fewer opportunities to sell throughout the year, it’s clear that any homeowners looking to sell their real estate should act fast, otherwise they might end up with their home on the market for months (or more).
Since interest rates are anticipated to rise throughout the end of the year, prospective buyers should also act now if they’re ready to purchase a home. Buyers will be able to find the best mortgage rates during the first six months of 2019.
Selling now won’t have a large impact on your ROI.
Home prices are expected to rise (unless the market crashes), but holding out doesn’t mean you’ll get more money. Since interest rates are also increasing and home prices are only expected to increase slightly by the end of 2019, selling now could help you lock in a buyer before the market slows.
An experienced agent can help you find the best local market opportunities.
There’s some debate on whether or not rates and prices will continuously increase, or if they’ll dip up and down throughout the first six months of the year.
If you’re hoping to buy or sell, the smartest move would be to work with a local real estate agent to find out what opportunities are available.
No one understands your local market better than an experienced real estate agent, so finding a strong partner is imperative in 2019’s uncertain market.
Clever can connect you with a top-rated agent who can help you negotiate the best price for your home or find the home of your dreams within your budget.