SANTA CLARA, Calif.,
Nov. 28, 2018 /PRNewswire/ -- Rising
rates and home prices will make it more difficult to buy or sell a
home next year, according to realtor.com®'s 2019
housing forecast.
The 2019 housing market see modest inventory gains, but with
mortgage rates expected to hit 5.5 percent by the end of the year,
monthly mortgage payments will rise 8 percent, putting home
ownership more out of reach, especially for younger Gen-Z,
Millennial and other first-time homebuyers. Upscale homes in
high-growth markets, however, will provide more opportunities for
buyers.
Other findings of the realtor.com® 2019 housing
forecast include:
- Home price growth will continue to slow, with a forecasted
increase of 2.2 percent;
- Inventory increases will remain moderate with less than a 7
percent increase;
- High-priced markets will buck the trend, with double digit
inventory gains;
- Millennials will account for 45 percent of mortgages in 2019
vs. 17 percent for Boomers;
- New tax plan will be good for renters, mixed for
homeowners.
"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," said
Danielle Hale, chief economist for
realtor.com®. "Unfortunately for buyers, it's only going
to get more costly to buy, especially the most-demanded entry level
real estate. To be successful, buyers should think through how
they'll adapt to higher rates and prices."
What will 2019 be like for buyers?
Buying a home will be an even more expensive undertaking in 2019 as
mortgage rates and home prices increase. Buyers who are able to
stay in the market will find less competition as more buyers are
priced out, but feel an increased sense of urgency to close before
it gets even more expensive. Their largest struggle next year will
be reconciling wants, needs and budget versus the heavy competition
of 2018. Although the number of homes for sale is increasing, which
is an improvement for buyers, the majority of new inventory is
focused in the mid-to higher-end price tier, not entry-level.
Rising mortgage rates and prices will keep a lot of new inventory
out of their budget and make it especially tough for first time
home buyers.
What will 2019 be like for sellers?
Although it remains a seller's market, sellers will need to be
mindful of their increasing competition and shouldn't necessarily
expect to name their price and get it in full -- a change from the
past few years. Above-median priced sellers, may find it will take
longer to sell and require offering incentives, such as price cuts
or other offerings. With less demand in the market, there will be
fewer bidding wars and multiple offers. However, with inventory
expected to remain limited in most markets, sellers who price
competitively can still walk away with a handsome amount of profit,
but not the price jumps observed in previous years.
Key Housing Trends of 2019
- Modest inventory gains continue; high-end inventory growth
spreads. Inventory hit the lowest level in recorded history last
winter, but finally bottomed out and reached positive territory in
October. National inventory increases will remain low in 2019 at
less than 7 percent. In the majority of markets, the number of
homes being put on the market or newly constructed has increased
slightly, while the pace of sales has slowed slightly, which has
helped stop the inventory decline. But the inventory increases or
slowing price increases necessary for a more widespread sales gain
are not forecasted to happen in 2019. While the situation is not
getting worse for buyers, it's also not improving notably in the
majority of markets.
High-priced markets are a different story. The majority of the
inventory gains have been in upscale homes in high-growth markets,
which suggests higher prices are incentivizing sellers. Next year,
realtor.com® forecasts more high-end inventory growth in
major metros with the largest increases expected in: San Jose-Sunnyvale-Santa
Clara, Calif.; Seattle-Tacoma- Bellevue,
Wash.; Worcester,
Mass.-Conn.; Boston-Cambridge-Newton,
Mass.-N.H.; and Nashville-Davidson-- Murfreesboro--Franklin, Tenn. all of which could see double
digit gains in inventory in 2019.
- Soft home sales continue. After the best sales year in a decade
in 2017, home sales are on track for a mild year-over-year decline
in 2018, which is likely to extend into 2019 with a 2.0 percent
decline. Although long-term desire to own a home remains strong,
especially among younger Gen-z and millennials, the market
challenges that make owning a home difficult continue to keep out
first-time buyers, locking them out not only of their home, but
also of the wealth by equity generation that owning provides.
- Millennials purchase the most homes. Millennials will continue
to make up the largest segment of buyers next year, accounting for
45 percent of mortgages, compared to 17 percent of Boomers, and 37
percent 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 homebuyers for the next decade as
their housing needs adjust over time.
- Tax plan remains a wild card for housing: In April 2019, taxpayers will go through the income
tax process for the first time since the new tax plan. For most
renters, the results will be good: lower rates and a higher
standard deduction should amount to lower tax bills. For
homeowners, it's a mixed bag. Some will benefit from lower rates
and a higher standard deduction, but many others will find limited
itemized deductions and personal exemptions mean a higher tax bill.
Despite the fact that 2017 home sales were the highest they've been
in over a decade, sales in 2018 started to decline immediately
following the tax plan. While many factors influence home sales, it
could be the case that without homeownership incentives some
renters are holding off on buying. How the market will react in
2019 remains a wildcard for housing.
For more information please visit:
https://www.realtor.com/research/2019-national-housing-forecast/
2019 Housing
Market Forecast
|
|
Mortgage
Rates
|
Up to 5.5% by year
end,
5.3% for the
year
|
Existing Home
Median Price Appreciation
|
+2.2%
|
Existing Home
Sales
|
-2.0%
|
Single-Family Home
Housing Starts
|
Up
8%
|
Homeownership
Rate
|
64.6%
|
Sales and Price
Forecast for 100 Largest Markets
|
|
Metro
Area
|
Sales
%
|
Price
%
|
Akron,
Ohio
|
0.3
|
0.7
|
Albany-Schenectady-Troy, N.Y.
|
2.4
|
2.0
|
Albuquerque,
N.M.
|
-6.4
|
3.2
|
Allentown-Bethlehem-Easton, Pa.-N.J.
|
4.6
|
-0.9
|
Atlanta-Sandy
Springs-Roswell, Ga.
|
-1.9
|
3.0
|
Augusta-Richmond
County, Ga.-S.C.
|
8.8
|
-1.1
|
Austin-Round Rock,
Texas
|
-4.0
|
3.7
|
Bakersfield,
Calif.
|
-6.6
|
2.7
|
Baltimore-Columbia-Towson, Md.
|
2.5
|
-2.2
|
Baton Rouge,
La.
|
2.1
|
1.0
|
Birmingham-Hoover,
Ala.
|
1.2
|
0.8
|
Boise City,
Idaho
|
1.5
|
6.9
|
Boston-Cambridge-Newton, Mass.-N.H.
|
3.6
|
4.6
|
Bridgeport-Stamford-Norwalk, Conn.
|
5.0
|
4.0
|
Buffalo-Cheektowaga-Niagara Falls, N.Y.
|
-0.1
|
3.8
|
Cape Coral-Fort
Myers, Fla.
|
-3.3
|
4.1
|
Charleston-North
Charleston, S.C.
|
1.5
|
1.1
|
Charlotte-Concord-Gastonia, N.C.-S.C.
|
-2.6
|
4.0
|
Chattanooga,
Tenn.-Ga.
|
5.2
|
4.3
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
|
-7.4
|
-1.9
|
Cincinnati,
Ohio-Ky.-Ind.
|
-3.1
|
3.1
|
Cleveland-Elyria,
Ohio
|
-6.0
|
-2.4
|
Colorado Springs,
Colo.
|
0.9
|
4.9
|
Columbia,
S.C.
|
0.0
|
1.0
|
Columbus,
Ohio
|
-0.9
|
4.6
|
Dallas-Fort
Worth-Arlington, Texas
|
-0.8
|
4.3
|
Dayton,
Ohio
|
0.7
|
0.9
|
Deltona-Daytona
Beach-Ormond Beach, Fla.
|
-1.3
|
6.3
|
Denver-Aurora-Lakewood, Colo.
|
-6.7
|
6.8
|
Des Moines-West Des
Moines, Iowa
|
-6.0
|
5.7
|
Detroit-Warren-Dearborn, Mich.
|
-1.7
|
5.1
|
Durham-Chapel Hill,
N.C.
|
2.9
|
4.1
|
El Paso,
Texas
|
7.9
|
2.5
|
Fresno,
Calif.
|
-6.5
|
3.3
|
Grand Rapids-Wyoming,
Mich.
|
4.0
|
8.2
|
Greensboro-High
Point, N.C.
|
-7.7
|
1.2
|
Greenville-Anderson-Mauldin, S.C.
|
0.6
|
4.6
|
Harrisburg-Carlisle,
Pa.
|
-1.4
|
4.3
|
Hartford-West
Hartford-East Hartford, Conn.
|
-0.7
|
-2.1
|
Houston-The
Woodlands-Sugar Land, Texas
|
0.4
|
3.1
|
Indianapolis-Carmel-Anderson, Ind.
|
0.5
|
4.0
|
Jackson,
Miss.
|
-4.9
|
5.1
|
Jacksonville,
Fla.
|
0.5
|
4.3
|
Kansas City,
Mo.-Kan.
|
-0.3
|
3.8
|
Knoxville,
Tenn.
|
-2.7
|
2.0
|
Lakeland-Winter
Haven, Fla.
|
5.0
|
7.4
|
Las
Vegas-Henderson-Paradise, Nev.
|
0.9
|
7.9
|
Little Rock-North
Little Rock-Conway, Ark.
|
3.1
|
1.1
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
2.2
|
5.4
|
Louisville/Jefferson
County, Ky.-Ind.
|
-2.7
|
0.3
|
Madison,
Wis.
|
-1.6
|
4.9
|
McAllen-Edinburg-Mission, Texas
|
-0.3
|
2.6
|
Memphis,
Tenn.-Miss.Ark.
|
-4.6
|
3.4
|
Miami-Fort
Lauderdale-West Palm Beach, Fla.
|
3.3
|
5.0
|
Milwaukee-Waukesha-West Allis, Wis.
|
-3.6
|
0.9
|
Minneapolis-St.
Paul-Bloomington, Minn.-Wis.
|
-2.0
|
1.7
|
Nashville-Davidson--Murfreesboro--Franklin,
Tenn.
|
0.8
|
6.9
|
New Haven-Milford,
Conn.
|
4.9
|
2.9
|
New Orleans-Metairie,
La.
|
0.6
|
4.6
|
*New
York-Newark-Jersey City, N.Y.-N.J.-Pa.
|
0.4
|
3.0
|
North
Port-Sarasota-Bradenton, Fla.
|
-2.9
|
6.2
|
Oklahoma City,
Okla.
|
0.2
|
3.0
|
Omaha-Council Bluffs,
Neb.-Iowa
|
2.8
|
4.3
|
Orlando-Kissimmee-Sanford, Fla.
|
-2.0
|
5.4
|
Oxnard-Thousand
Oaks-Ventura, Calif.
|
-2.0
|
3.0
|
Palm
Bay-Melbourne-Titusville, Fla.
|
-3.0
|
7.8
|
Philadelphia-Camden-Wilmington,
Pa.-N.J.-Del.-Md.
|
-1.6
|
0.2
|
Phoenix-Mesa-Scottsdale, Ariz.
|
3.6
|
5.6
|
Pittsburgh,
Pa.
|
3.8
|
2.6
|
Portland-South
Portland, Maine
|
-0.5
|
4.9
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
-1.6
|
5.0
|
Providence-Warwick,
R.I.-Mass.
|
2.1
|
3.8
|
Raleigh,
N.C.
|
2.4
|
3.9
|
Richmond,
Va.
|
-1.0
|
1.5
|
Riverside-San
Bernardino-Ontario, Calif.
|
3.7
|
4.0
|
Rochester,
N.Y.
|
-0.4
|
3.0
|
Sacramento--Roseville--Arden-Arcade,
Calif.
|
-1.0
|
2.3
|
St. Louis,
Mo.-Ill.
|
3.0
|
3.0
|
Salt Lake City,
Utah
|
-4.2
|
3.8
|
San Antonio-New
Braunfels, Texas
|
-1.0
|
2.1
|
San Diego-Carlsbad,
Calif.
|
-4.3
|
2.7
|
San
Francisco-Oakland-Hayward, Calif.
|
-0.6
|
4.2
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
0.2
|
4.2
|
Scranton--Wilkes-Barre--Hazleton, Pa.
|
3.9
|
2.0
|
Seattle-Tacoma-Bellevue, Wash.
|
-0.6
|
3.8
|
Spokane-Spokane
Valley, Wash.
|
-4.1
|
3.8
|
Springfield,
Mass.
|
0.7
|
2.7
|
Stockton-Lodi,
Calif.
|
2.0
|
5.0
|
Syracuse,
N.Y.
|
3.7
|
1.1
|
Tampa-St.
Petersburg-Clearwater, Fla.
|
0.0
|
7.0
|
Toledo,
Ohio
|
2.1
|
1.7
|
Tucson,
Ariz.
|
-2.9
|
7.1
|
Tulsa,
Okla.
|
5.1
|
2.2
|
Urban Honolulu,
Hawaii
|
-7.9
|
0.0
|
Virginia
Beach-Norfolk-Newport News, Va.-N.C.
|
0.5
|
1.1
|
*Washington-Arlington-Alexandria,
D.C.-Va.-Md.-W.V.
|
-2.8
|
-0.8
|
Wichita,
Kan.
|
3.7
|
2.2
|
Winston-Salem,
N.C.
|
-0.6
|
3.2
|
Worcester,
Mass.-Conn.
|
-2.9
|
3.3
|
Youngstown-Warren-Boardman, Ohio-Pa.
|
2.5
|
3.8
|
*Forecast data was compiled before the announcement of Amazon
HQ2, which is likely to have a significant impact on each city's
housing market.
About realtor.com®
Realtor.com®, The Home of Home Search℠, offers an extensive
inventory of for-sale and rental listings, and access to
information, tools and professional expertise that help people move
confidently through every step of their home journey. It pioneered
the world of digital real estate 20 years ago, and today is the
trusted resource for home buyers, sellers and dreamers by making
all things home simple, efficient and enjoyable. Realtor.com® is
operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV]
subsidiary Move, Inc. under a perpetual license from the National
Association of REALTORS®. For more information, visit
realtor.com®.
Contact:
Lexie Puckett Holbert:
lexie.puckett@move.com
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