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How 2019 Will Change the Real Estate Market

the suburbs of these states may begin to see a rise in first-time and older Millennial buyers.

This past year was truly the year of the seller when it comes to the housing market. Prices were up, and buyers were competing for their perfect dream home like a scene out of The Amazing Race. This year, however, looks to be a different story.

Mortgage Rates on the Rise

With mortgage rates at historic lows at the beginning of last year, homebuyers were able to relax a bit. Not that buying a home is a relaxing venture, but lower rates meant more affordable payments for many first-time homeowners. Unfortunately, that bliss did not last.

real estate
Investors are moving towards bonds, which is pushing mortgage rates down. Pixabay

Rates rose throughout the year, and in late December, the Federal Reserve hiked benchmark federal funds rate by 25 points, saying they planned to raise the rate again in 2019. Realtor.com estimates the rate for a 30-year mortgage will hit 5.5% by the end of the year. Zillow.com estimates it could soar as high as 5.8%. However, with the U.S. Federal government shutdown factoring into predictions now, investors are moving towards bonds, which is pushing mortgage rates down. Where the trend goes from here is questionable, but once the government resumes business as usual, it’s likely to rise again.

Housing
Lower rates meant more affordable payments for many first-time homeowners. Wikimedia commons

Inventory Decreasing

While mortgage rates are on the rise, housing inventory is falling. With a decrease in the available homes for purchase, many home-buyers can expect to be outbid and left standing on the sidewalk staring forlornly as someone else moves into their dream home. To make matters worse, home prices are still climbing.

Cheryl Young, a senior economist with Trulia.com, stated, “We don’t see a big infusion of supply coming on anytime soon, and because those prices are still increasing, and they’re outpacing wage growth, affordability is actually getting worse.”

Also Read: Car Subscription – An Alternative to Buying a Car

Which States Are Best?

The housing market is stronger in some states than others, and those statistics change every year. States with a demand for mortgages, where the market is performing well include:

  • Nevada,
  • Alabama
  • Texas,
  • Florida,
  • California,
  • Utah,
  • North Carolina,
  • Colorado,
  • Tennessee,
  • Oklahoma
  • Georgia.

Millennials are shifting into family mode, so the suburbs of these states (and others) may begin to see a rise in first-time and older Millennial buyers. Experts predict suburbs will begin to look like miniature cities as the influx of new families spreads across the country. However this all plays out, 2019 is looking to be a tumultuous year in the U.S. housing market.

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