2018 was a bit of a game-changer for the housing market. It kicked off with a continuation of historic low rates and rapid home price appreciation and ended with rising rates and signals of softening. As we all prepare for what we can expect (but certainly not control) in 2019… here is what Forbes is predicting and what we think it means for you.
Rates Approach 6%. Forbes anticipates that 30-year fixed rate mortgages could reach 5.8% - a number we have not seen in 10 years .
Millennials Will Account For 45% Of Mortgages. As the largest cohort of millennials turn 29 (the age considered peak household formation), millennials are expected to buy more homes than Gen Xers and Boomers. This trend is expected to continue through 2020 as millennials turn 30.
Starter Homes Will Be In Demand. With millennials leading the buying segment, the time is prime for move-up buyers to make the leap. Those selling starter homes are expected to have the largest buyer pool waiting.
Home Price Momentum Will Ease. When you hear about the deceleration of home price growth, Forbes expects a nationwide average of a 3% increase in home values. Note that this does NOT mean homes are losing value, simply gaining value but at a slower rate than we have seen in the past several years.
Sense Of Urgency Is Restored. When rates hit their most recent highs, everyone paused a bit to see what the market would do. While competition decreased and price momentum slowed, there was no crash or burst of the bubble. There was, however, a reality check that rates are going up, so buyers are feeling the pinch to purchase while they still can. On the same note, sellers are realizing that prices are stabilizing and that now is a good time to benefit from those large equity gains made in the last 24 months.
Rents Will Rise. Forbes explains that recent and mild drops in rent will be short-lived, as healthy economic growth equates to rising rents. They will likely be moderated by the steady and continuing investment in apartment construction, keeping rental increases close in line with income growth.
Technology Disruption Expected To Surge. iBuying, AI, blockchain, machine learning – these are the terms to get used to hearing as technology disruptions attempt to change the way buyers, sellers and investors interact. While we are more than thrilled to embrace these changes, especially as we see many of them emerge from Silicon Valley, we also champion even more so the need to distinguish which advancements are long-needed industry improvements versus which are not in the homeowners’ best interests. Like we always say… there is no app for integrity or experience no matter how ‘smart’ the product.
Overall, 2019 appears to be defined by market normalization: more normal inventory levels & more normal price increases. Did we mention that normal is not a bad thing? You don’t have to see extraordinary price gains to sell, or extremely reduced rates to buy. Normal is literally the new normal, and while it might feel strange compared to some of the activity we have seen, it’s actually a very good thing for the market – and for you. Moderation offers opportunity for both buyers and sellers; if you know what you want – we can help you devise a strategy to get there with the conditions we are in. We can’t wait to help you make 2019 your best year yet!
Read The Complete Forbes Article HERE
All our best,
Mark & Jason
