03 Dec 2019 Trends Home Buyers and Sellers Should Watch
2019 Trends Home Buyers and Sellers Should Watch
The real estate market is much like the weather: you can’t predict it entirely however you can get a general idea of what can be expected. A recently, report from realtor.com analyzed the housing data to come up with a forecast of what trends we might see in the upcoming New Year. Here are the top five trends home buyers and sellers should watch for in 2019:
- More inventory: it is no secret that the housing market has been challenged by the lack of available inventory for years now. Nationwide, housing inventory hit the lowest numbers in history last winter, however we are finally starting to see a recovery. The research indicates an increase of inventory, around seven percent is projected. This is good news for home buyers who have been beat out of the market, but a new reality for sellers.
“More inventory for sellers means it’s not going to be as easy as it has been in past years—it means they will have to think about the competition,” says Danielle Hale, realtor.com‘s chief economist.
“It’s still going to be a very good market for sellers,” she adds, “but if they’ve had their expectations set by listening to stories of how quickly their neighbor’s home sold in 2017 or in 2018, they may have to adjust their expectations.”
- Home prices: seller’s have been reaping the benefits of low inventory the last few years, but that is that could change in the buyer’s favor.
“In some ways, life is going to be easier for home buyers; they’ll have more options,” Hale says. “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.”
- Increasing interest rates: interest rates are hovering around five percent currently and are predicted to reach 5.5 percent by the end of 2019. Income is also predicted to increase by approximately three percent, leaving a financial challenge, especially for first-time home buyers.
- Millennials still dominate the buying pool: millennials are the biggest pool of home buyers in the market, and contribute forty-five percent of the existing mortgages. When compared to seventeen percent for baby boomers and thirty-seven percent for Gen Xers, that is a significant foothold. While first-time buyers may still feel a pinch in home pricing and now rising interest rates, the move-up buyers will reap the benefits of their existing equity and increased inventory choices. It is projected 2020 will be the peak for millennials home buyers, and a bulk of them will be age thirty.
- New tax law is a wild card: this time last year, the GOP was still making revisions to the tax code and no one really knew how it might impact the housing market. Fast forward twelve months, and we still don’t really know how the new tax law will play out. That is primarily because most taxpayers won’t be filing taxes under the new law until April 2019.
“I think the new tax plan will affect mostly homeowners and home buyers in the upper parts of the distribution,” says Andrew Hanson, associate professor of economics at Marquette University in Milwaukee, WI. “Those who either own or are buying higher-priced homes are going to pay a lot more.”
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