It’s going to be a challenging year for home buyers in 2019. They will continue to compete for a short supply of homes. Home prices and mortgage rates are likely to keep moving upward, bruising affordability.
But 2019 is likely to bring some welcome developments, too, for buyers and mortgage borrowers. Builders are constructing more entry-level homes, lenders are gradually making it easier to qualify for a loan, and first-time home buyers are getting the attention they deserve.
HERE ARE NINE HOUSING AND MORTGAGE TRENDS TO WATCH FOR IN 2019:
Wanted: More homes for sale.
Real estate has been a seller’s market for more than six years, meaning that there are more would-be buyers than homes for sale, sliding the balance of negotiating power in sellers direction. It will remain a seller’s market in 2019.
A prolonged seller’s market is not the ideal situation for home buyers. But the forecast contains some hope: The number of homes for sale is expected to rise. The problem is that the pent-up demand is still expected to continue to exceed supply, even with more homes for sale.
Home prices will keep going up Home prices are expected to deliver a good news, bad news year in 2019.
First, the bad news:
Home prices are predicted to keep rising. The good news is that most forecasters believe prices won?t rise as fast in 2019 as they did in 2018.
“Home price appreciation will slow down and the days of easy price gains are coming to an end, but prices will continue to rise,” says Lawrence Yun, chief economist for the National Association of Realtors. NAR predicts that existing home prices will rise 2.5% in 2019, to a median of $265,200, compared with a 4.7% rise in 2018, to $258,700.
CoreLogic and Realtor.com also predict a slowdown in sale prices of existing homes in 2019.
Mortgage rates will continue rising.
From the beginning of 2018 to mid-December, 30-year fixed mortgage rates went up a little less than three-quarters of a percentage point, to around 4.75%. Forecasters expect mortgage rates to rise again in 2019, but at a slower pace.
Freddie Mac expects the 30-year fixed mortgage rate to rise half a percentage point in 2019, and the National Association of Realtors predicts a rise of 0.4 percentage point. Fannie Mae’s forecast is for an increase of just 0.1 percentage point.
Affordability still a concern.
As home prices and mortgage rates rise in tandem, home buyers find it harder to afford homes.
“We do worry about affordability, particularly in some areas that have lower inventory of homes for sale,” says Randy Hopper, senior vice president of home lending for Navy Federal Credit Union. The places with low inventory tend to be places where home prices rise fastest, as the demand for homes exceeds supply.
*excerpts from article by Holden Lewis for Yahoo Finance via Economic Focus