According to multiple sources, the housing market is going to level-out nationwide in 2019, with home prices anticipated to grow between 2.2 and 3.79 percent, a significant drop compared to recent years. This should lead to a more balanced housing market, but not necessarily to a buyer’s market.
Buyers will still have to confront similar issues in the housing market as they did in 2018, including deficit in start home supply. According to Danielle Hale, chief economist at realtor.com, “Inventory will continue to increase next year, but unless there is a major shift in the economic trajectory, we don’t expect a buyer’s market on the horizon within the next five years. Unfortunately for buyers, it’s only going to get more costly to buy, especially the most-demanded entry-level real estate.”
Rising interest rates present an additional issue for first-time home buyers. Realtor.com believes interest rates will climb to 5.3-5.5 percent in 2019 and that monthly mortgage payments will rise a full 8 percent. Cheryl Young, senior economist at Trulia, further explains, “I believe we’re going to see rates go toward what they were 10 years back coming out of the recession… The real issue around affordability and rising interest rates is the fact that prices have been outstripping wage growth. The bottom end of the market, especially first-time homebuyers, are already feeling the squeeze, so any rise in interest rates takes another bite out of affordability.” Despite the challenges first-time homebuyers may face, the group is expected to account for 45 percent of mortgages in 2019. In fact, Trulia expects 21 percent of millenials to purchase property in 2019.
Sellers will continue to see interest and movement in the market, however, the days of multiple offers are going to slow. Realtor.com expects sales to fall 2 percent in 2019 as the market cools from robust recovery in 2017 and 2018. Young continues, “For the first time in a while, home seller sentiment has decreased. I think people, net, are still thinking it is a good time to sell, but it is not as favorable as it was last year.”
The bottom line according to multiple experts is that housing market with normalize in 2019, bringing a balance between buyers, sellers, and renters.