Real estate housing market forecasters have released their predictions for 2019. They see challenges ahead that both buyers and sellers should be aware of. Let’s take a closer look at what to expect in the new year.
Millennials Will Continue as the Largest Group of Buyers
Millennials are now the largest generational group of homebuyers at 45% of all new mortgages generated. They are followed by Gen-X at 37% and the Baby Boomers at 17%. Millennials will continue to grow as the largest group of homebuyers through 2019 and into 2020, when most of them will be in their 30’s. While Millennials have different priorities and expense profiles than previous generations (such as a focus on travel and experiences plus higher levels of student loan debt), they do see the value and sense in home ownership. This trend toward practicality will continue to feed more Millennial homebuyers into the market.
More Inventory Will Be Available
Having faced a shortage of available homes to buy for the last several years, buyers will be encouraged by the increase in available inventory. However, the inventory bump will be fairly small in many housing markets. As more new construction homes come to the market, inventory will continue to grow in most areas.
Affordability Will Continue to Be an Issue
Buyers and sellers are both impacted by affordability. Continued increases in home prices paired with continued increases in mortgage interest rates will have a negative impact on buyers’ ability to afford home ownership. With less buyers able to afford the current prices and interest rates, the competition for available homes will decrease. While it will still be a “seller’s market”, sellers will have less negotiating power than they’ve enjoyed in the previous few years.
Taxes Are Still an Unknown Factor
The impact of the new tax laws that go into effect for the coming year have forecasters still scratching their heads. There are a number of different ways the new tax laws could create challenges or benefits for both buyers and sellers. It’s too soon yet to tell how the overall picture will look until after tax season ends in April.
Overall, buying a home will continue to be a solid investment for most people in the new year. However, the rising interest rates and increasing home prices could push home ownership out of reach for a sizable number of potential buyers. We will see how accurate these predictions are as we move into the new year.