Real Estate Predictions: What to expect from the market in 2019
2018 has been an interesting year for the real estate market. We saw the year open with high, rising prices and historically low mortgage rates and, in opposition to this, we saw the year close with prices beginning to level out and mortgage rates rising to some of the highest rates of the decade. So, what in the world should buyers and sellers expect in 2019? Although it is impossible to perfectly predict the future, we can use history and current trends to make an educated guess as to what to expect in 2019.
Mortgage rates will rise and buyers will start to feel as though they have to beat the clock.
Most experts agree that rates will continue to rise in 2019, possibly reaching 5.8%. These rates, although high for recent history, are still historically low for the way the US economy has been performing. The anticipated raising of rates may create a sense of urgency for many buyers, who will be trying to lock in a rate before each subsequent rate hike.
Millennials don’t just want coffee and avocado toast, they want houses…
Millennials will not be stopped by rising interest rates. They will be the largest group of buyers, making up approximately half of all mortgages in 2019. The largest concentration of millennials will be turning 29 this year, which is the beginning of peak home-buying age. Millennial first-time home buyers may have trouble competing, but older millennials who are current homeowners looking to sell and upgrade should do quite well.
Home price growth will slow.
Gone are the days of 2016 where every home for sale in Portland would go through a crazy bidding war. Rising home values have begun to slow and should continue this trend in the new year. This does not mean homes are losing value, but rather we will see homes gain value at a slower, normal rate. Ruben Gonzalez, the chief economist at Keller Williams, estimates that due to increasing inventory levels the rate of growth will settle at around 3%. Home value appreciation of 3% is right around the typical industry standard.
So, what does it all mean?
Ultimately, real estate is set for a slower year in 2019, but that’s not necessarily a bad thing. I think Tendayi Kapfidze, chief economist for LendingTree, puts it in context quite nicely:
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.