As 2018 comes to an end, 2019 will be sure to bring some changes to the housing market. Here are a few home trends experts predict to expect in 2019:
More homes will be for sale, especially luxury homes
The inventory of available homes has been very tight for the past few years which has resulted in cut-throat competition. Homes have been steadily hitting the market, but not enough to fully keep up with the demand. Inventory hit the lowest level in history last winter but has been on the road to recovery this year. Growth will continue for next year, but not at an exponential rate —less than 7%.
Although this is great for buyers, sellers will have to face a new reality.
“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.
“It’s still going to be a very good market for sellers,” she adds, “but if they’ve had their expectations set by listening to stories of how quickly their neighbor’s home sold in 2017 or in 2018, they may have to adjust their expectations.”
These metro cities are expected to see the biggest increases in inventory: San Jose, CA; Seattle, WA; Worcester, MA; Boston, MA; and Nashville, TN. All of these metro markets, which may include neighboring towns, could see double-digit gains in inventory in 2019.
Buying A Home Will Remain Tough
Although sellers have had the advantage for the past several years, things will begin to change.
“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
Hale predicts that mortgage rates will increase from the current rate of 5% to 5.5% by the end of 2019. That will result in monthly mortgage payments on a typical home being 8% more for 2019. That will be hard for first-time home buyers who tend to borrow the most heavily and who don’t have any equity in a current home to draw on.
Millennials will be the largest home buying group in 2019
Millennials are now the biggest generational group of home buyers, accounting for 45% of mortgages (compared with 17% for baby boomers and 37% for Gen Xers).
While many first-time home buyers will have a tough time buying, Millennials who have owned a home in the past will reap the benefits of their home equity and abundance of options on the market. Regardless of whether they’re part of that younger set starting a career or the older set that’s starting a family, “they’re going to be more price-conscious than any other generation,” says Ali Wolf, director of economic research at Meyers Research.
Many millennials are still carrying student loan debt and still want to be able to spend on experiences, like traveling. This will take away from a down payment or monthly mortgage payments.
“They want to maintain a certain lifestyle, but they still see the value in owning a home,” Wolf says.
Overall, Millenials are likely to make up the majority of home buyers for the next decade. The year 2020 is projected as the peak for millennial home buying— when the majority of them will be age 30.