2019 Real Estate Forecast: What Home Buyers, Sellers And Investors Can Expect

EDITOR’S PICK by FORBES

There’s no doubt about it: the 2018 housing market has seen its ups and downs.
The year started with sky-high home prices, historically low mortgage rates and a definitive upper hand for sellers. In recent months though, home price growth has faltered, rates have risen to their highest point in nearly eight years, and favor has started to shift from seller to buyer.

Will these trends continue? Will housing experience the same wild ride in the new year? Here’s what experts predict will happen in 2019 real estate market:
Mortgage rates will continue rising.
“Despite steady climbing for the past two years, mortgage rates remain lower than they were during most of the recession and below average for the type of strong economic growth we’ve been experiencing. That will change in 2019, as the 30-year, fixed rate mortgage reaches 5.8% — territory not seen since the dark days of 2008 when rates were racing downward in response to the housing crisis.” — Aaron Terrazas, director of economic research for Zillow

Millennials will keep buying homes — despite those rising rates.
“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 next 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
“Millennials will continue to make up the largest segment of buyers next year, accounting for 45% of mortgages, compared to 17% of Boomers, and 37% of Gen Xers. While first-time buyers will struggle next year, older Millennial move-up buyers will have more options in the mid-to upper-tier price point and will make up the majority of Millennials who close in 2019. Looking forward, 2020 is expected to be the peak Millennial home buying year with the largest cohort of millennials turning 30 years old. Millennials are also likely to make up the largest share of home buyers for the next decade as their housing needs adjust over time.” — Danielle Hale, chief economist for Realtor.com

This graphic shows the role Millennials will play in the 2019 and 2020 housing markets.COURTESY OF REALTOR.COM

Home buying power will decrease, but that could be a good thing.
“Most homebuyers budget a monthly payment. As rates rise, a fixed monthly payment translates into less borrowing capacity and buying power is down about 10% since the same time last year. As there are less buyers at each price point, the appropriate market response is a slowdown in sales and an easing in price momentum.” — Tendayi Kapfidze, chief economist for LendingTree
Overall home sales will drop.
“As we look toward 2019, we are anticipating home sales to decline around 2%. We’re expecting it to be another slightly slower year as buyers continue to wrangle with higher mortgage rates after contending with several years of rapid price growth.” — Ruben Gonzalez, chief economist at Keller Williams
Inventory troubles will ease — not too much, though.
“The wave of first-time home buyer demand will be met by somewhat higher inventory levels than in 2018. However, while the days of multiple offers and bidding wars may be history in some markets where inventory is increasing, inventory will likely still remain tight nationally through 2019.” — Kushi

Amir Vahdat|Realtor®|Broker |CIPS DRE 01819847|Berkshire Hathaway
949-682-9090|www.OCLuxuryProperty.com

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