4 Key Real Estate Trends Both Home Buyers and Sellers Should Be Aware Of In 2019
Updated: Mar 25, 2019
If you're in pursuit of buying your own home this year, you should keep an eye on the ever-changing tides of the housing market. Now, markets are like the weather: You can't entirely predict how they will act, but you can most certainly get a sense of the forces that will push things in one direction or another. Let's begin...
1. We'll have more homes for sale, especially luxury ones
I've been keeping an eye on the super-tight inventory of homes for sale for several years now. While homes have certainly been hitting the market, it still seems as if there's never enough to keep up with the demand. Nationwide, inventory actually hit its lowest level in recorded history last winter, but this year it finally started to recover. We're expecting to see that inventory growth continue into next year, but not at a blockbuster rate — less than 7%.
2. Affording a home will remain tough
In some ways life is going to be easier for home buyers as they’ll have more options. However, life can also going become more difficult for them as we expect mortgage rates to continue to increase. We also 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.
Mortgage rates are now hovering around 5%, and I believe they will reach around 5.5% by the end of this year. That means the monthly mortgage payment on a typical home listing will be about 8% higher next year. Meanwhile, incomes are only growing about 3% on average. This can be 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.
3. Millennials will still dominate home buying
Just a few years ago, millennials were 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 I already mentioned, things will be tough for those first-time buyers. However the slightly older move-up buyers will reap the benefits of both their home equity and the increased choices in the market. And regardless of whether they're part of that younger set starting a career or the older set that's starting a family, they’re going to be more price-conscious than any other generation.
4. The new tax law is still a wild card
At the time of last year's forecast, the GOP's proposed revision of the tax code was still being batted around Congress. While there was talk that it might discourage people from buying a home, no one really knew how it might affect the real-estate market.
This year... Unfortunately we still don't really know. That's because most taxpayers won't be filing taxes under the new law until this 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. My insight is that those who either own or are buying higher-priced homes are going to pay a lot more.
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.
If you need any assistance with purchasing or selling your next home I would love to help you! Feel free to contact me via my contact form :)
- Monica Singer