Just like any forecast, housing price predictions made by leading analysts vary in 2019.
Sure, expectations for homebuyers and sellers will rely heavily on location and price range as always. But that offers little certainty for the market expectations as a whole.
According to Realtor.com’s 2019 national housing forecast, buyers can expect homeownership to be more expensive this year. That's because it expects both mortgage rates and home prices to increase:
“Buyers who are able to stay in the market will find less competition as more buyers are priced out, but feel an increased sense of urgency to close before it gets even more expensive.
“Their largest struggle next year will be reconciling wants, needs and budget versus the heavy competition of 2018. Although the number of homes for sale is increasing, which is an improvement for buyers, the majority of new inventory is focused in the mid-to higher-end price tier, not entry-level.”
Let's dig a little deeper.
Like this past year, 2019 will continue to be a seller’s market. However, Realtor.com notes that sellers won’t profit to the same extent they have over the past few years. Less market demand means fewer bidding wars — plain and simple.
Home sales in 2018 declined from 2017, which was the best year for the market in a decade. Moving forward, Realtor.com predicts a 2 percent decline in 2019.
Not everyone is in agreement though.
“We’ve been optimistic that sales are going to very modestly increase in 2019,” said Freddie Mac Chief Economist Sam Khater.
“For that to happen, economic growth needs to remain stable and mortgage rates need to remain under 5.25 percent. We expect both of those conditions to occur, which should support a modest rise in home sales.”
Some worry that escalating home prices could lead to a bubble or crash in the housing market. Fortunately, at least one economist doesn’t see that happening.
"The current market conditions are fundamentally different than what we were experiencing before the recession 10 years ago," said Lawrence Yun, chief economist for the National Association of Realtors (NAR).
"Most states are reporting stable or strong market conditions, housing starts are under-producing instead of over-producing and we are seeing historically low foreclosure levels, indicating that people are living within their means and not purchasing homes they cannot afford. This is a stronger, more stable market compared to the loosely regulated market leading up to the bust."
Yun cites a lack of inventory in lower-priced homes to back his rationale. That means buyers in that market can expect to pay a premium.
On the other hand, there is an abundance of inventory in upper-priced homes. Those in the market for high-priced real estate may be able to secure better deals.
Realtor.com said existing home prices will rise 2.2 percent in 2019. A Zillow survey of housing experts and economists anticipates a 3.79 percent increase for 2019. Freddie Mac is forecasting 4.2 percent price appreciation. The National Association of Realtors predicted existing-home prices to rise 3.1 percent.
Realtor.com forecasted price changes in the top 100 metro markets. The largest anticipated home price increase is expected in Grand Rapids, Michigan at 8.2 percent. Other significant home price increases are forecasted for Florida and the Southwest U.S.:
- Daytona Beach, Fla. (6.3 percent)
- Lakeland-Winter Haven, Fla. (7.4 percent)
- Orlando, Fla. (5.4 percent)
- Palm Bay-Melbourne-Titusville, Fla. (7.8 percent)
- Tampa-St. Petersburg, Fla. (7 percent)
- Phoenix, Ariz. (5.6 percent)
- Tucson, Ariz. (7.1 percent)
- Las Vegas, Nev. (7.9 percent)
Several markets are forecasted to have slight price declines in 2019, including:
- Allentown-Bethlehem-Easton, Pa.-N.J. (-0.9 percent)
- August, Ga. (-1.1 percent)
- Baltimore, Md. (-2.2 percent)
- Chicago, Ill. (-1.9 percent)
- Cleveland, Ohio (-2.4 percent)
- Hartford, Conn. (-2.1 percent)
- Washington, D.C. (-0.8 percent)
Meanwhile, expectations for mortgage loan rates vary widely:
- Fannie Mae expects the 30-year fixed rate to hold steady throughout the year around 4.5 percent.
- Freddie Mac’s Khater predicted it will hold below 5.25 percent.
- Realtor.com expects mortgage rates to hit 5.5 percent by the end of the year. That would result in an 8 percent increase in monthly mortgage payments.
- Zillow forecasted the 30-year fixed rate to jump all the way to 5.8 percent this year.
Someone has to be right (or at least the most right). Only time will tell though.
When it comes to housing market trends and analysis, we're not the experts. (And as you can see, even the experts aren't quite sure what to expect in 2019.)
However, we do keep a close eye on the market because it impacts the home financing opportunities we match our customers with. Based on our research, here's a safe baseline of expectations for 2019:
- A stronger, more stable, seller's market.
- An increase in home prices and the cost of homeownership.
- A great deal of uncertainty surrounding mortgage loan rates.
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Jack is the Head of Content Marketing at LeverageRx, a personal finance company that simplifies how healthcare professionals shop for financial products and services. A Creighton University graduate and former advertising creative, he has written extensively about topics in personal finance, work-life, employee benefits, and technology. His work has been featured in MSN, Benzinga, TMCNet, StartupNation, Council for Disability Awareness, and more.