Last year was quite the tease in the housing market. The year started out hot, only to taper off halfway through. But plenty of people still traded their “For Sale” signs for “Sold” ones. Will 2019 finish with more of the same results? How will the housing market shake out in the current economic climate?
Whether you’re selling, buying or staying put, here are the 2019 real estate trends you need to know!
Real Estate Trend #1: Home Prices Are Rising Slowly . . . With Less Offers
Unless you’ve been living under a rock, you’ve heard that during the course of 2017 and early 2018, home prices made a giant 10% jump. Wow! This year, however, may finish with a different story. Home prices are estimated to rise in 2019, but at a much slower pace, and the number of homes for sale is expected to increase by a mere 1%.(1)
What’s the reason? Well, part of the slowdown is due to increased mortgage interest rates and another part is because of overall economic uncertainty. That combination is enough to discourage many buyers who are on the fence about purchasing a home.
But there are still eager buyers in the market, and many of them are looking for newly built homes. In fact, new home construction is projected to increase by 8% in 2019.(2) That’s the good news. Here’s the bad news: There just aren’t enough new homes to go around in some areas. Plus, construction companies also don’t have the manpower to keep up with demand.
What’s the bottom line? Expect the new construction that is available to go for a higher price.
What Higher Prices Mean for Sellers
A nice profit may be on the horizon! The number of homes sold this year is still expected to rise, even if it’s at a slow pace. That’s great news for sellers! But keep in mind that a lot of buyers are being priced out of the market, which could lead to fewer offers for your home.
So what should you do about this? Be aware of your competition. With less offers to go around, you want your home to really stand out from similar ones in your area. Prepare your home for potential home buyers and work with a real estate agent (ME!) to help you list your home at the right price.
And be sure to wait for the right offer. Some buyers may try to gut punch you with a low number. If you aren’t in a hurry to move, wait for an offer that gives you the most profit. Remember, the less desperate person always has the upper hand when negotiating!
What Higher Prices Mean for Buyers
If you’re going to buy a home in this expensive market, you absolutely must find out how much house you can really afford. Crunch the numbers yourself (here’s a mortgage calculator) and figure out a monthly payment your budget can handle.
Commit to staying within that budget amount. Don’t rush into a home purchase that doesn’t make financial sense for you no matter how much pressure you feel watching competitors pluck good homes off the market. You could screw up your finances!
If you can’t put down at least 10% on a 15-year fixed-rate conventional loan, then you probably can’t afford a house in this market. A down payment that’s less than 10% will strangle your budget with massive monthly mortgage payments. But if you want to get prepared to buy and you’re committed to your budget, here are some options to consider:
- Keep saving.
- Sacrifice some wants. If you can’t afford to buy the house you want, be willing to give up some “nice-to-haves” for your “must-haves.” Find the least expensive home in the best neighborhood you can afford and you can upgrade as your income and savings increase over time.
- Expand your search. What if the location where you’re planning to buy is what’s busting your budget? You might be surprised at the gem you can find in a less popular neighborhood. Getting connected with a real estate agent who really knows the area (ME!) is the best way find a home that fits your budget and lifestyle.
Buying a home can be stressful, but I can help you streamline the process! I can help you think through all the important parts so you can rest easy when your dream home is officially yours.
Real Estate Trend #2: Mortgage Interest Rates Are on the Rise
Call it the seven-year itch. Mortgage interest rates are on the rise after years of being at a standstill. Interest rates are projected to increase to an average of 5% for a 30-year mortgage and 4.4% for a 15-year mortgage.(3)
It’s been seven years since mortgage rates were this high. But despite grumblings, that doesn’t mean the economy is in trouble. It actually means the opposite! To help stabilize the strong economy and rising inflation during the past few years, the Federal Reserve increased short-term interest rates. It’s somewhat natural to see a trickle-down effect to the bank level like what we’re seeing now with mortgage interest rates.
The increase basically means more people are willing to spend and borrow. Still, expect things to be a little different next year as buyers and sellers adjust to these changes.
What Higher Mortgage Interest Rates Mean for Sellers
In a nutshell, plan for your house to be on the market a little longer and prepare to possibly receive fewer offers. A mortgage is a big commitment, and adding higher interest rates to the mix will make many buyers pause. Partner with a real estate agent (ME!) who understands the current market. I will help you set expectations for how much you can make, and how long you’ll have to wait for the right offer.
What Higher Mortgage Interest Rates Mean for Buyers
Even though mortgage interest rates are the highest they’ve been in a while, they’re still relatively low. If you’re not buying with cash, be smart and go for a conventional 15-year fixed-rate mortgage. That way, you know exactly what your payment will be over the life of the loan.
Real Estate Trend #3: The Majority of Home Buyers Are Millennials
Move aside, baby boomers and Gen X’ers! Guess who’s taking the over the homeowner leaderboard? Yep, Millennials! They’re getting older and finding stable careers. Their household income has increased to $88,200, and they’re looking to buy their first homes in middle and upper-middle class neighborhoods.(4)
This works out perfectly for them as more baby boomers are retiring and downsizing. Next year, millennials will lead the way in number of mortgages, accounting for 45% of the market. They’ll be followed by Gen X’ers at 37% and baby boomers at 17%.(5)
What More Millennial Home Buyers Means for Sellers
Here are three important words: Know your buyer. Millennials are internet savvy and do their research before house shopping. They look for:
- Easy online shopping. The home search starts online for millennials, so you need to make the best possible impression on the internet. If you list your home with me, I will invest in high quality photos, with drone aerial video footage (if necessary), in addition to giving your home its own web page and paid digital and print advertisement.
- Quality over size. Yes, square footage matters. But millennials are more concerned about how sustainable and usable each space is. Get rid of your junk so they can visualize a bright future in your home without your stuff there. Learn more about decluttering here.
- Location. A lot of millennials are looking for homes in 18-hour cities like Nashville, Tennessee, or Austin, Texas, that offer big city life at a more affordable cost of living. If your home is in a walkable area with access to public transit, expect millennials to come knocking at your door.
- Low-maintenance lifestyle. Millennials are used to living in the age of high-tech advances and Amazon Prime. They’re looking for energy-efficient homes with smart appliances. If you don’t have them, they’ll look elsewhere or lower their offer so they can upgrade after they buy.
What More Millennial Home Buyers Means for Buyers
Okay, if you’re looking for a three-bedroom, single-family home in the suburbs, expect to have a lot of competition. You may have to reprioritize what you want in a dream home. Follow these tips:
- Know what you want. Decide what you absolutely need in a home. If you’re married and house hunting, you and your spouse need to agree on must-haves. Compare your individual lists and combine them for your real estate agent to use as the foundation of your home search.
- Write a letter. Sending a personal story to your seller might be just the thing that makes you stand out from similar offers.
- Hire an experienced pro. Last year, 90% of millennial home buyers used real estate agents to purchase their homes.(6) Think they’re onto something? You bet! Don’t try to buy on your own. Give me a call to ensure your home-buying process is smooth for everyone involved.
What If I’m Not Buying or Selling a Home This Year?
You may be thinking, “all this is great, but I’m not going anywhere anytime soon.” That’s fine, but, here are a few tips to keep in mind to ensure your house is ready to hit the market the second you decide to list your home, click here. Here are a few other things to keep in mind until you’re ready to buy or sell:
From what we can see, the real estate market is not going to crash.
With such fast-rising mortgage interest rates, some folks are wondering if the housing market could collapse again. Well, it’s impossible to know for sure, but a number of factors indicate a housing crash is not in the foreseeable future and the economy is still strong. Here are some indicators:
- People are spending money.
- There’s a low unemployment rate and new career opportunities.
- All-cash real estate buyers are becoming more common.
- Fewer buyers are using interest-only home loans that allow you to pay just the interest each month and not the principal.
- Millennials want to buy.
- Taxes are lower.
Regardless of your neighborhood, buyers are interested.
Even though buyers in 2019 may be choosy, determined ones might be willing to consider neighborhoods that don’t have easy access to highways or aren’t in close proximity to a big city. If you think you live in an unpopular neighborhood or believe your home isn’t what buyers are looking for, think again. Now may be your perfect time to sell. Give me a call to find out!
Take Control of the Trends With a Top-Notch Realtor with loads of Prime Atlanta Real Estate Experience
Whether you’re selling or buying, you can take advantage of the current trends by partnering with an experienced real estate agent. Complete the form below to get in touch with me for more information about potentially buying or selling your home. Even if you’re not quite ready to put your home on the market yet, I can help guide you in the right direction to prepare your home for market. I can also help you identify a list of “must haves” so we can hit the ground running when you do decide you’re ready to buy.
(Source: Dave Ramsey)