2019 HOUSING FORECAST: WHAT EVERYONE SHOULD EXPECT

2019 HOUSING FORECAST: WHAT EVERYONE SHOULD EXPECT

2019 HOUSING FORECAST: WHAT EVERYONE SHOULD EXPECT
It is a statement of fact that house prices in 2018 witnessed different dimensions both positive and negative which started with high price of homes coupled with low mortgage rate. Meanwhile, some months ago, such phenomenon has changed that is, the hike in house prices has reduced and the mortgage rates have risen to their highest point in nearly 8years and the buyers are now favored above the sellers. This shows that the rate of houses that would be for sale will increase whilst the numbers of buyers shrink. It is indeed needful for the home sellers to understand the present concept and be informed that gone are the days of frenzied market, it is time for them to aptly price their homes in order to attract buyers.
The chief economist at the National Association of Realtors, Yun Lawrence said “For buyers, there will be challenges when it comes to interest rates, but they don’t have to make hurried decision anymore”.
This year is likely to bring more improvement to the stock as builders are constructing more homes for new comers, lenders are also making the application for mortgage loan at ease gradually and those that wish to buy home for the first time are getting the apt attention.
You can watch out for these trends from housing market:
1. Increase in house prices: It is observed that the house prices will continue to rise in 2019 but slowly and not as fast as they did in 2018. It was reported that existing home prices will rise 2.5% in 2019 to a median of $265,200 compared with a 4.7% rise in 2018 to a median of $258,700. According to CoreLogic and Realtor.com, it is observed that in 2019 there will also be a slowdown in prices of existing homes. Frank Nothaft, the chief economist for CoreLogic said “Rising prices and interest rates have reduced home buyer activity and led to a gradual slowing in appreciation”.
Therefore, it is imperative to say the time of easy price gains are coming to an end whilst prices will continue to rise.

2. Increase in mortgage rate: Forecasters has opined that the mortgage rate would increase but at a low rate compared to last year. The 30-years fixed mortgage rate is expected to rise with 0.4% in 2019 according to the National Association of Realtors. This shows that in between this year and next year end, the mortgage rate is expected to bounce up and down. In NerdWallet’s daily mortgage rate survey, it was recorded that the 30-year fixed mortgage rate kicked off the year averaging 4.09% which by Nov, it rose to 5.09% which is exactly a percentage point increase and then fell more than a quarter of a percentage point in one month.

3. Increase in homes for sale: There were complains about inadequate supply of homes to purchase by the would-be buyers in the last six years which is expected to reduce due to inventory in 2019. The forecasters give hopes that this year will witness increase in homes for sale, although the agitation to purchase houses would still continues even with the increase in supply.
Realtor.com’s forecast came up with a conclusion that: “While the situation is not getting worse for buyers, it’s also not improving notably in the majority of markets”. Therefore, it is imperative that more housing constructions are put in place considering the increase in population growth.

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4. Tendency to afford home: We know since the home prices increase whilst mortgage rate rise, the tendency of homebuyers to fulfill their desire becomes a point of notice. Most especially places with low inventory of homes that are for sale, the affordability of those willing to purchase homes is noted and hence worrisome because those areas are places where the home prices rises beyond expectation and lead to minimal supply of the demanded homes. According to Danielle Hale, the chief economist of Realtor.com who said “many markets are reaching the point where a typical home price is bumping up against affordability limits”.

5. Tax worries persist: Prior to now, homeowners find it easy to deduct interest they paid on up to $1million in mortgage debt including the interest rate on home equity loans and lines of credit which enables them to reduce their tax income. Now, the first few months of this year would clearly buttress how the new tax changes affect homeowners. One of the vital rules is the new cap on the mortgage interest deduction whereby you can only deduct interest on up to $750,000 in mortgage debt. The present issue led to the question of how the $10,000 limit on state and local taxes deduction often referred as SALT will affect housing markets in high-tax states e.g. New Jersey, New York, Connecticut and California.
6. The level of lending eases: It is now obvious that the lenders understand an enduring lesson in the imbroglio surrounding housing market by making it realistic that the borrowers are able to repay their loans. So, they decided to protect the mortgage standards; partly on their desire and partly in response to a regulatory crackdown on risky mortgages, in fact these changes compounded it for borrowers to get a home loan.
According to a Mortgage data provider, Ellie Mae shows that there has been slight standard of relaxation of credit. Average credit scores for home purchases slipped a bit in October (this was contained in the latest data released) compared with 12months earlier. The debt-income ratios that measure borrower’s debt loans rise upward at the same time which means they have much debt and less strength to withstand financial emergencies.

7. Sellers that are overconfident to witness more battle: We have earlier discussed that 2019 is undeniable for seller’s market whereby the potential homebuyers would be more than the homes available for sale albeit it won’t be easy to expect smooth bid from the buyers. In fact, this is the issue with people that are selling homes with prices above the median for the local market. According to Realtors.com economist, Hale who said “Surprisingly, it is going to be more difficult for buyers and sellers in 2019 especially for buyers looking for less expensive homes and sellers selling more expensive ones”.

Recommendation:
As a seller: Make sure you name the price of your property realistically and have it in mind to engage in more deals in cutting listing price or offer because of competition.
As a buyer: Be sure of yourself and your worth, don’t be too haste in make decision and don’t stoop so low. You can take your time and find the desirable apartment that fits your pocket.

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