What You Need to Know About 2019 Real Estate
With every new year comes the question for home buyers and sellers: What's the real estate market going to look like this year? Is it a good time to sell a home? Is it a good time to buy a home? Real estate predictions and market conditions are a lot like weather predictions—you can't pinpoint exactly what will happen, but you can get a sense of the driving forces that push things in one direction or another.
We've rounded up some of the top experts in the real estate field from Forbes Magazine and Realtor.com and summarized what they have to say about the market in 2019. Here's what you need to know!
Rising Mortgage Rates
Predictions from the experts are that mortgage rates, now hovering around 5%, will reach around 5.5% by the end of 2019. That means the monthly mortgage payment on a typical home listing will be about 8% higher this year. Meanwhile, incomes are only growing about 3% on average. This is toughest on first-time home buyers, who tend to borrow the most heavily and who don't have any equity in a current home to draw on.
“In some ways, life is going to be easier for home buyers; they’ll have more options, but life is also going to be more difficult for home buyers, because we expect mortgage rates to continue to increase, we expect home prices to continue to increase, so the pinch that they’re feeling from affordability is going to continue to be a pain point moving into 2019.”Diane Hale, Chief Economist, Realtor.com
Millennial Buying Power
Just a few years ago, Millennials were the new kids on the block, just barely old enough to buy their own homes. Now they're the biggest generational group of home buyers, accounting for 45% of mortgages (compared with 17% for Baby Boomers and 37% for Gen Xers). Some of them are even moving on up from their starter homes. As mentioned above, things will be tough for those first-time buyers. But the slightly older move-up buyers will reap the benefits of both their home equity and the increased choices in the market.
"The housing market in 2019 will be characterized by continued rising mortgage rates and surging millennial demand. Rising rates, by making housing less affordable, will likely deter certain potential homebuyers from the market. On the other hand, the largest cohort of millennials will be turning 29 this year, entering peak household formation and home-buying age, and contributing to the increase in first-time buyer demand.”Odeta Kushi, Senior Economist for First American
More Luxury Homes for Sale
Homes have been hitting the market, but not enough to keep up with the demand. Nationwide, inventory actually hit its lowest level in recorded history in 2017, but in 2018 it finally started to recover. Expect to see that inventory growth continue into this year, but not at a blockbuster rate—probably less than 7%.
“Buyers who are able to stay in the market will find less competition as more buyers are priced out but feel an increased sense of urgency to close before it gets even more expensive. Their largest struggle will be reconciling wants, needs and budget versus the heavy competition of 2018. Although the number of homes for sale is increasing, which is an improvement for buyers, the majority of new inventory is focused in the mid- to higher-end price tier, not entry-level.”Danielle Hale, Chief Economist, Realtor.com
Home Price Appreciation Slows
So what does 2019 hold for you as a current homeowner? Home price appreciation values are expected to slow down, but not come to a complete halt—assuming that the inventory levels are consistent with the market predictions.
“Right now, for 2019, we believe home price appreciation will likely slow to near 3%. This is based on the assumption that the recent pattern of increasing inventory levels will be sustained in the upcoming year.”Ruben Gonzalez, Chief Economist at Keller Williams
New 2019 Tax Laws Still a Wild Card
With the new tax laws this year, experts still don't really know how that will drive the future market. That's because most taxpayers won't be filing taxes under the new law until April. And while some people might have a savvy tax adviser giving them a better idea of what's in store, for many, the reality check will come in the form of a bigger tax bill—or a bigger refund. Renters are likely to have lower tax bills, but might not be tempted to buy while affordability remains a challenge, and with the new, increased standard deduction reducing the appeal of the homeowner's mortgage-interest deduction.
"I think the new tax plan will affect mostly homeowners and home buyers in the upper parts of the distribution. Those who either own or are buying higher-priced homes are going to pay a lot more."Andrew Hanson, Associate Professor of Economics at Marquette University
So What Does All This Mean for the Market in 2019?
Now that you know what the real estate experts are saying, what does it all mean? Well, we think this final quote pretty much sums it up.
“The medium and long-term prospects for housing are good because demographics are going to continue to support demand,” he said. “With a slower price appreciation, incomes have an opportunity to catch up. With slower sales, inventory has an opportunity to normalize. A slowdown in 2019 creates a healthier housing market going forward.”Tendayi Kapfidze, Chief Economist for LendingTree
Are you planning to buy or sell A home in 2019?
Let Sun-Surf Realty help you navigate the local coastal North Carolina real estate market whether you're looking to buy or sell. Contact us today!