As we are at the beginning of the new year we can all assume what the real estate market will do for 2019. While we cannot exactly know what will happen, we can get a sense of what we can expect based on a few factors. The economic research team at Realtor.com has recently studied housing data in order to estimate trends for the new year. Based on their findings it appears as both buyers and sellers will each face some challenges. Here is a closer look at the top 4 things to know.
The Luxury Inventory Level Will Increase
The trend for inventory has been low for a long time now. While properties have been listed for sale intermittently, not enough of them have been going active to keep up with demand. In 2018 we saw inventory levels increasing and while it is predicted that this will continue into 2019, it will probably be at a slow rate of increase.
“More inventory for sellers means it’s not going to be as easy as it has been in past years—it means they will have to think about the competition,” says Danielle Hale, realtor.com’s chief economist.
Home Affordability Challenges
Buyers have had the difficulty of a limited number of homes to choose from along with rising prices, but will this change much this year?
“In some ways, life is going to be easier for home buyers; they’ll have more options,” Hale says. “But life is also going to be more difficult for home buyers, because we expect mortgage rates to continue to increase, we expect home prices to continue to increase, so the pinch that they’re feeling from affordability is going to continue to be a pain point moving into 2019.”
Millennials Will Dominate the 2019 Buyer Pool
Millennials are the largest segment of buyers out and are accounting for 45% of mortgages according to statistics shared by Realtor.com. Some are first time buyers and others are already trading up to buy larger properties. The year 2020 is slated to be the peak year for millennial home buying activity as most of them will be 30 years old.
New Tax Law
As far as the revision of tax code goes, this remains yet to be seen.
“I think the new tax plan will affect mostly homeowners and home buyers in the upper parts of the distribution,” says Andrew Hanson, associate professor of economics at Marquette University in Milwaukee, WI. “Those who either own or are buying higher-priced homes are going to pay a lot more.”
Hanson also anticipates that the biggest change here will be in mortgages with people being less likely to take out larger loans. More information will become clear after April 2019 when most will have completed their tax returns.