Whether you want to buy, sell or rent a home in 2019, it helps to understand the current market and predictions by reliable sources. On the upside, a volatile market has become customary, as 2018 started with historically low mortgage rates and soaring home prices and ended with faltering growth and an eight-year mortgage rate high.
If you want to know what 2019 has in store, here are a few theories about forthcoming real estate trends.
Rising Mortgage Rates Will Continue
Near the end of 2018, buyers felt the pinch as Feds raised mortgage rates to almost 5 percent. Unfortunately, experts expect this trend to continue, with strong economic growth fueling a hike expected to reach 5.8 percent by mid-year (an environment not experienced since 2008). As the most noticeable change in recent months, this current will affect every other item on this list.
Millennials Will Dominate the Market
Despite high mortgage rates, millennial buyers are expected to continue pursuing homeownership. While Baby Boomers will comprise 17 percent of the market and Gen Xers 37 percent, millennials are expected to account for 45 percent of mortgages in 2019. And with most being first-time buyers, new builds and starter homes could have an advantage. In addition, sellers and real estate professionals will need to get creative with marketing to appeal to this unique demographic.
Prices Will Normalize
With rising interest rates, home buying power decreases, making sale prices less likely to increase. This change is welcome to most since real estate prices have skyrocketed in recent years in popular cities. It’s no longer a seller’s market, folks.
Home Sales Will Decrease
Although experts predict only a two percent decline in home sales, sellers could still feel the pinch. After all, wrangling a down payment and accounting for a monthly mortgage get sticky when rates keep rising.
Inventory Will Be Hit and Miss
Part of the recent acceleration in home prices was due to lack of inventory. Many sellers had multiple offers and bidding wars since buyers outnumbered available units. With rates slowing demand and new builds increasing slightly, some cities will see balance. In other areas, however, new construction won’t outpace demand enough to make a significant difference. In short, inventory won’t make things worse for buyers, but it likely won’t make them much better, either.
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