2019 Could Be A Buyers’ Market For Real Estate?

Here what experts think about 2019 Real Estate Market.

Rising mortgage rates and home prices are doing more to put a damper on the market.

In this environment, potential home buyers can be reluctant to make a large purchase such as a house. The last sustained government shutdown in 2013 saw a slump in home sales.

It is too soon to tell whether the recent decline is a temporary or a major pullback.

In their forecasts for 2019, real estate experts anticipate the housing market slowing down, but not stalling, with prices and mortgage rates moderating.

“If mortgage rates trend sideways next year, as we anticipate, and home price appreciation continues to moderate, improving affordability should breathe some life into the housing market,” said Doug G. Duncan, chief economist at Fannie Mae.

This is what experts say about this situation:

  • National Association of Realtors The National Association of Realtors expects home sales to flatten and home prices to continue to increase, though at a slower pace.

“The forecast for home sales will be very boring — meaning stable,” said Lawrence Yun, NAR chief economist. Inventory continues to be a concern. “All indications are that we have a housing shortage,” Yun said. “If you look at population growth and job growth, it is clear that we are not producing enough houses.”

  • Realtor.com Because of diminishing affordability from mortgage rate and price increases, Realtor.com forecasts a 2 percent decline in home sales. But buyers looking for high-end homes in pricey metro areas should have more options. Realtor.com expects price growth to slow, rising just 2.2 percent in 2019.

“Inventory will continue to increase next year, but unless there is a major shift in the economic trajectory, we don’t expect a buyer’s market on the horizon within the next five years,” said Danielle Hale, chief economist.

  • Zillow According to Zillow, rising mortgage rates are encouraging homeowners to stay put and discouraging would-be buyers.

“Rising mortgage rates will set the scene for the housing market in 2019,” said Aaron Terrazas, senior economist at Zillow. “They will affect everyone, driving up costs for home buyers and creating more demand for rentals. Even current homeowners could start to feel locked into their mortgage rates.”

Zillow anticipates mortgage rates will reach 5.8 percent and home values will grow by 3.79 percent in 2019.

  • National Association of Home Builders After a strong start last year, home-builder confidence fell to its lowest level in more than three years by the end of 2018. Several of the big home builders downgraded their sales or orders forecasts for 2019.

“The market has slowed,” said Robert Dietz, chief economist for the National Association of Home Builders. “We’ve revised our forecast down.”
Builders face significant head winds because of the “five Ls” — labor, lots, laws, lending and lumber. A labor shortage, lack of buildable lots, onerous regulations, strict lending and tariffs on supplies such as lumber have increased their costs, says Dietz.

Single-family construction, which includes for-sale and not-for-sale homes, will increase nearly 2 percent from 2018 to around 900,000 units. Based on demographics, that’s 200,000 to 300,000 less than the market could absorb and well below the average number of starts pre-housing crash. From 2000 to 2003, the average was 1.3 million.
Builders have taken a lot of heat for not building enough homes or building primarily luxury homes. But Dietz said there has been an uptick in townhouse construction, a more affordable single-family option.

  • Mortgage Bankers Association: The Mortgage Bankers Association expects moderate growth in home purchase mortgage originations, with refinance volume continuing to decline. It anticipates the 30-year fixed-rate mortgage will level out at 5.1 percent.

“The supply of homes for sale and lack of affordability continue to be challenges for the housing market,” wrote MBA economists Michael Fratantoni and Joel Kan. “Even with the anticipated cool down in economic growth, we expect that housing demand will remain strong, mortgage rates will stabilize, wage growth will increase, and home price growth will moderate, providing favorable conditions for growth in the home purchase market.”