The 2018 real estate market sent many different signals to investors, having several “ups and downs,” according to Forbes. Although 2019 started off with high home prices, the growth has slowed a bit, which in turn has led to some concern among real estate investors that home prices might no longer be on the upward trend.
According to the National Association of Realtors, pending home sales declined by 2.2% in December, pointing to some pessimism as we began the year. But is this trend really going to hold true for 2019, or might there be reason for cautious optimism in the 2019 real estate market?
What to Consider Before Predicting the 2019 Real Estate Market
Before we make any ironclad predictions, let’s consider the important variables that play a factor in real estate prices:
Interest rates. The Federal Reserve raised interest rates three times in 2018, and that trend appears ready to slow down. Not only will the slowing trend mean that rates remain relatively low for real estate, but it suggests that the Fed itself is not entirely bullish on the current economy.
Demand. With new home sales declining in December, it may point to decreased demand. But with low unemployment numbers to open the year, there may be plenty of workers who need homes as well. That points to a “mixed” demand for 2019.
Pending home sales. Overall, the index for December’s housing in pending home sales decreased in 2018 over December of 2017. This points to fewer people selling their homes and paints a picture of what the supply of housing will look like in 2019.
Understanding supply and demand—as well as the availability of credit—helps paint a more accurate picture of the broad strokes of the real estate market.
Predictions in Real Estate for 2019
With that in mind, what predictions make sense for the rest of 2019?
Millennials will have a profound impact. Millennials have grown into some of the most influential housing buyers, which reflects demographics changing as much as anything else. While it’s true that Baby Boomers and Generation X have more money to play with in general, the demand from millennials will help shape what kind -- as well as how much -- real estate will be available.
More home construction. Experts anticipate more home construction in 2019, highlighting the trend that people are looking to customize their experience rather than always purchasing an existing home. This could be one reason why home sales have been “soft” in recent months, with more and more trending to purchasing land and building their homes themselves.
Expect stable home sales prices. Unless there’s a black swan event that affects the economy in unpredictable ways, most should expect relatively stable home sales prices. That’s according to the National Association of Realtors, as speaking to the Washington Post. Lawrence Yun, the organization’s chief economist, said: “The forecast for home sales will be very boring—meaning stable.”
According to the Post, the National Association of Realtors “expects sales to increase 1 percent to about 5.4 million and the median home price to rise 3.1 percent to around $266,800 in 2019, and $274,000 in 2020.”
With these statistics in mind, what should the ordinary buyer think about if considering purchasing real estate in 2019?
Tips for Making the Most of 2019
If you’ve been saving up for a down payment for a long time and think you may be ready to enter the real estate market, there’s no time like 2019. True, it’s possible that in any given year, the real estate market could be headed for an unexpected downturn. But with interest rates still favorable to buyers and the supply of homes to be relatively stable, there’s no sign that home prices are set to plummet in the near future.
You should also begin to build a strong credit history immediately if you do not have one already. The benefits include potentially getting lower interest rates and more easily qualifying for loans, mortgages, and other consumer financial products offered by big banks.
Those considering purchasing a new home may want to think about looking for the right homes in their area. In 2019, the relatively stable outlook means that you should have plenty of time to consider what you want. Investors who are looking to buy at the bottom can especially take their time, as there’s no sign of an imminent threat to home prices. With interest rates set to remain low, making a home purchase at a fixed rate right now could mean securing a good deal for a long time.