Real estate current trends: Everything you need to know about the market heading into 2019...

Posted by Company Admin on Monday, December 17th, 2018 at 3:49pm.

 

Real estate current trends: Everything you need to know about the market heading into 2019...

Mortgage rates will continue to rise and hit 5.5% in 2019.

Over the past year, the monthly average 30-year fixed mortgage rate has increased by nearly a full percentage point, from 3.92% to about 4.9%. Despite what seems like swift upward movement, mortgage rates remain historically low. Therefore, even with the slight increase, we are still in relatively good shape.

Homebuyers will have more negotiating power, and sellers will need to make more compromises.

Buyers are pushing back on houses with $23,000 worth of foundational issues, for instance. They're saying "we're burnt out" and "we're tired," and are looking to buy homes in good condition. In the recent past, buyers found themselves paying for everything, but now buyers are in a much better position to ask sellers to cover some of the costs. In 2019, expect bidding wars to become less competitive, and price reductions to become more common.

As price gains slow, home values will still appreciate around 2-3% per year.

As of late, sellers have been basking in the glow of exceptional yearly price gains in the range of 5-8% across the country. Expect this trend to come to an end in 2019. The market going forward is not currently in danger of any major catastrophes, and homeowners will likely continue to enjoy moderate price appreciation, but at a slower pace. Expect yearly growth to be more in the 2-3% range this year, with some upper-end markets actually seeing a bit of a decline.

Markets will cool faster or slower depending on local conditions and tax burdens.

Certain markets have manifested different trends and numbers based on different tax schemes and conditions. For example, states with higher property taxes were hit harder by 2017 tax reform packages which have led to a pause in buyer enthusiasm and left many sellers feeling like selling might not be a bad idea, especially with the tax burden. Cities that experienced extreme price growth will be more prone to market correction in 2019.

Upper-tier markets will soften while demand for entry-level housing remains high.

The demand for entry-level housing will still be strong, but prepare to see a slowdown in existing-home sales. In recent years, we've seen home prices increase at a rate that is higher than the increasing rate of wages, making affordability a challenge. In the short term, expect to see limited overall sales, but in the future, the outlook is bright as the highest number of millennials enter their home buying years.

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