2019 Housing Market Predictions – Economic Insights
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2019 Housing Market Predictions – Economic Insights

So Danielle like everybody wants to know
what do we have to look forward to well it depends on whether a buyer or a
seller and whether or not you’re looking forward to this year right so our 2019
forecast calls for a tougher road ahead for both buyers and sellers that’s not
to say that it’s going to be impossible but there are factors that are going to
make 2019 a little bit more difficult regardless of what side of the housing
market you’re on so to dig into buyers for the for the
first perspective buyers have some bright spots we do expect more inventory
and 2019 coming to market so they will have more options to choose from however
it’s not going to be so much inventory that we see a lot of price pressure
right we see home prices slowing so they will grow at about 2% pace instead of
the four to five percent pace that we’ve seen in sales prices recently so a
slower pace of increase but they’re still increasing so buyers are still
looking at more expensive housing coupled with the fact that mortgage
rates are rising so that’s a trend we’ve had for the past couple years and so we
expect that to continue in 2019 mortgage rates at the end of 2018 are going to
finish the year right around 5% and we expect them to finish next year around
five 1/2% so they’ll be about a half a percentage point higher
those two factors combine price increases and mortgage rate increases
mean that we’re looking at about 8% more in the monthly payment so
then you combine that with income growth of around 2 to 3% things are gonna get a
little bit more expensive for buyers and that’s that’s why we say it’s going to
be tougher it’s not impossible but if you’ve been looking for a while it’s
it’s not gonna get easier on that front yet so they might start to feel a small
squeeze but not a lot I mean what I heard was about a 5% differential right
between so so and it seemed that mortgage rates have been pretty steady
and I think the Fed just came out and said that more they’re actually gonna
hold mortgage rates but you’re saying you think we’ll see a bit of an increase
next year yeah so it’s hard to interpret what the Fed says some people did read
chairman Powell’s comments recently as we’re gonna wait and see and he did
emphasize that the Fed is being data dependent so
looking at the data and how data on the economy evolves and what that means for
the right path they’ve been in this tightening cycle
for the last couple years now and we expect it to continue
most forecasts had called for three to four increases in the Fed rate the Fed
Funds rate next year so 2019 we’re expecting two to three in line with
continued growth in the economy but if for some reason economic growth shows
signs of starting to slow which it hasn’t yet but it could if it does then
they might Ratchet back on their expectations for the Fed funds rate, Fed Funds rate increases that they’re planning to do and so and he
said you know we’re closer to the neutral range on the federal funds rate
and earlier in the year in October I think it was he had said something about
you know we still are a couple steps away from a neutral Fed Funds rate level
so those two things are are consistent he hasn’t really changed his position
but he has changed the focus of his position that’s caused some people to
think well maybe they’re gonna move slower than they otherwise would have
let’s talk about the Fed Funds rate what does that really mean how does that play
in so I think a lot of consumers don’t really understand what that is yeah so
the Fed Funds rate is a short-term rate that they set for overnight borrowing
between banks and it has this cascading effect of you know once the short-term
rate is set at the rate that it’s set then that impacts long-term rates
because you can create arbitrage opportunities to make money basically
you can loan the Fed money banks can on a short-term basis and then lend it out
to others and that basically cascades all the way up the yield curve so
mortgage rates are affected by those short-term rate trends and affected by
the same factors that drive those for short-term rate trends so the overall
strength of the economy but they’re not tied together in lockstep so mortgage
rates you know most people take out a mortgage for 30 years or something right
15 or 30 years so long-term rates and then they tend to stay in their homes
for about 10 years so we see mortgage rates tied very closely to the ten-year
rate because that’s sort of the time horizon it’s an English time horizon and
a 10 year rate is affected by these short-term rates but also by the general
outlook on the overall economy because people are thinking about not just
what’s going on now but what’s gonna happen over the
ten years so that’s why fed fund rate is sort of important to the mortgage rates
but so is the general economic outlook and I think in terms of the general
economic outlook obviously there’s a lot of politics involved and and sort of
where we are politically so how does a buyer navigate all of that so they’re on
real calm and they’re looking how do they navigate and decide what to do for
2019 well they can do things like a look at our forecast yeah so they don’t have
to try to piece together their own trends based on what they see in the
market we’ve done that for you so by all means look at our forecast we expect
mortgage rates to continue to increase based on the fact that we expect the
economy to continue to improve in 2019 and so we’ll go from about 5 and 1/2 or
sorry a 5% rate at the end of 2018 to roughly a five and a half percent rate
to the end of 2019 so half a percentage point increase it’s not terrible but the
rates are going to get higher so if you’re thinking about this from the
perspective of a buyer you want to think about how you’ll navigate this right so
think about what you qualify for now in a home I maybe test out what happens to
your budget if mortgage rates do go to five and a half percent so that you
don’t have to totally revamp your search you already know what your budget limit
is at the higher more jury you

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42 thoughts on “2019 Housing Market Predictions – Economic Insights

  1. It'll always the best time to buy when your paycheck depends on that purchase. The fact is housing has outpaced incomes by 40% driven my historically low interest rates. The 2020 crash is locked in.

  2. Real estate prices were boosted by quantitative easing. That is government money given to banks that they can only use for lending or buying bonds. That will only create more inflation. If QE stop, real estate will collapse. If it continues, it will create social problems or government revolt because it create a far greater power gap between to have and the have not!

  3. Materials cost drive new home pricing. Materials have risen in price dramatically over the last few years, due to natural disasters that are driving up demand. Rising mortgage rates will reduce buying power along with higher cost to build new. I think resale values will stay about the same or even continue to rise as long as someone can afford to buy a home and wants to live there.

  4. I've been hearing for the past year that 2020 there will be another housing crash but not as bad as 2008. I will be selling my property in New Haven Ct this spring/summer as we'll be looking to purchase our retirement home while downsizing somewhere in central Delaware. To be honest i'm shocked at how expensive the homes are down here after being in CT since 2002, I was expecting cheaper….

  5. Buying doesn't pencil in CA. Can't speak nationwide, but I expect downward price pressure as more people in their early 30s opt to rent instead of buy. From a a pure investment perspective there is around a 40% premium in monthly payments to buy. Assuming you can afford that premium you would be better served financially to drop it in a long term index fund. Just some back of the envelope numbers- a long term index fund should preform better then 7% year over year for a ten year period and your home may get 5% a year for the same time period, minus the interest on your outstanding debt which is around 5% and minus repair costs. The math is more complicated then I have to write here, but essentially in a five to ten year period you will make virtually no money from an investment perspective. The equity you will build up will come from the actual dollars you paid into your forced savings account aka your principle payments and you will receive little to know price appreciation on these dollars when other costs are taken into consideration.I could write a long article on this, but in short the investment opportunity is currently very poor for a typical family.

  6. Saving up for the next 3 years and hoping the market crashes to buy for reasonable price but then again that’s just how it is for California. Gotta have the money to stay here.

  7. prices drop in issaquah/sammamish/kirkland more than 200K. Only china can save the housing market and they will just after the crash in 2020

  8. Realtor s always say market is going up, why aren't houses not selling after 60 days. A percentage in interest rate hike is another 200 to 300 dollars more, salary is not going to increase to fix the cost of living. So renting has become the new normal

  9. Millennial, 34, Northern Colorado. I make 80k a year and I cant afford a house. And I make more than 90% of my peers. Something is seriously wrong with this situation. They want $350k for a $240k home. They want $275k for an apartment (condo) here. Millennials don't want to BUY an apartment. They want a house. Prices gotta come down. There's no other way.

  10. The median price in Phoenix is $260k at the height of the boom it was $250k. If you factor in inflation we are still below the height of the market which was about 11 years ago.

  11. Realtors and banks make money as long as there're sales going on, regardless of the housing price. And generally, if the price is high, the sales is low, and vice versa. And now both sales and prices are droping.

  12. Typical Real Estate Agent response. Same response in 2005 here is what their 9 grade brain cannot comprehend….

    1) Recession, Truila, Zillow, Redfin, economists predict a 2020 recession. Job growth will decline, employers will lay off employees, zombie companies which lived offof QE loans will need to become profitable or shut their doors, and the combined average family income of 59K will shrink

    2) Housing comes in cycles; the average return of housing since the 1980's is 3%. the average return of the S&P 500 is 13%. If housing BOOMED in 2005 then crashed in 2008, what will happen in 2020? Especially in Nevada which is a boom bust State. Everything from gold to water, rises and falls in Nevada housing will drip 20-30%.

    3) Housing projects are 3 years out. They are based upon rents. If the rental market is great, builders seek loans and build, however by the time they are 80% into their projects the recession hits and units go unrented driving down prices.

    4) Resilience. If 1 in 5 families move in with families and friends, this is a 20% foreclosure rate. Families will be much better off cutting out the $2200 per month mortgage for a $600 shared housing fee paid to friends and family. If a family has a 2400 sq foot home with a 30 year mortgage of $2300, there is no way in a recession can they stay in the home, nor will it be sold. The best option is splitting the cost with another family. This will be the rebirth of the new multiple family unit. Not to mention garage conversions which will be a new housing rage.

    5) Finally, Sub-prime lending is back. Trump got rid of Dodd Frank, banks want to compete for these new "non-prime" loans, zero down, low FICO scores and non-employment requirements. B of A just purchased $10 billion of these loans, like they did from Countrywide in 2007. The big banks are prepared for a housing crisis in 2022-2024 and will soon scoop up everything foreclosed, take a giant bailout to offset the losses, then repackage them and sell them back in 2027 for a giant profit.

    6) Nevada’s largest employer Tesla, is still unprofitable. When other electric car manufactures start competing against Tesla, Tesla will need to restructure, breaking the plant up and siphoning off labor to other parts of the country. The GOED, touted Apple coming to Reno’s Industrial Park. However, Apple is now here and has no jobs in Nevada. Drive by the facility and there is not a single car driving either in or out of the giant campus. Same for Google, same for Switch. These “employers” are not hiring humans, these are remote off site locations or hubs for data storage. The hotels, the restaurants, the building are supporting the hope that these industries continue. Construction is the basis for Nevada’s growth supporting tech but tech is coming to a halt in 2020.

    7) Australia is in a housing CRISIS. They are no different than the USA, the cost to build in Melbourne is the same to build in Las Vegas. Lumber needs to be imported, so does labor. They have millennial, they have big car loans. Their RE market is now CRASHING because if over inflated. Do you think any Aussies know about the 2008 financial crisis?

  13. I would comment that you are far better off with investing in a home rather than paying a landlord. Homeownership is not only about if you home goes up or down in value its about the memory you share with your family and the joy of having a place to call your home. Besides the real estate market is like the stock market the longer you are in your home the better chances you are at realizing equity.

  14. I'm a California broker for nearly 20 years both in real estate and lending. My business is built on being straight with my clients.I will tell you that at the VERY VERY VERY least these ladies are SUGAR COATING the market. There are so many nice homes on the market that are taking months to sell, and not at an increase! My buyers are getting lower prices and concessions. While my sellers are getting lower asking and paying those concessions! Also for the lending especially refinances are almost no existent. While purchase loans are mostly low down payment buyers. Its a buyers market more and more every day! If you have to sell? Be realistic and price your home right or expect your home to sit until you do.

  15. Market has been slowing since last year. By next year it’ll be a buyers market for good. Couple that with a possible recession we could see this downward trend to continue. If you own and love your home then you’re fine. If you’re looking to buy, this is a good time. Maybe wait a little longer for even better prices . But it’s definitely bad for sellers.

  16. Just rent. Don't buy. I won't buy a one until prices come down to realistic levels, there is reform throughout the entire financial system and the real estate market isn't so unstable. People need to buy homes as places to LIVE and not as an investment.

  17. The reality is no one knows. I can tell you that in a macro picture, CA is priced high due to Gov. Restrictions. Also, I dont see as big a need for being geographically close to work in the future.

  18. The U.S. economy is in the middle of a new land/property market cycle, a cycle that averages 18-21 years depending on the extent to which monetary policy provides a high or low level of credit for speculation in land and property. A strong indicator that the markets are heavily speculation-driven is the extent to which investors are involved in acquiring property with the intent of rapid turnover (i.e., flipping for quick gains).

    By lowering interest rates to rock bottom after 2008, the Federal Reserve prevented the nation's land markets from clearing the speculation-derived gains realized in the last cycle. Instead, property prices were propped up. Low mortgage interest rates were capitalized by market forces into even higher land and property prices than were reached in 2007. The result is that millions of households (and many businesses) are burdened with historically high levels of mortgage debt. Servicing this debt at low rates of interest is not the issue. Any interruption in income, employment or business revenue will result in huge numbers of mortgage loan defaults, with the incidence of loss per loan higher than was experienced with the collapse of the sub-prime mortgage market in 2008.

    I teach a semester-long course on "The State of the U.S. Economy and Society." The Powerpoint modules used in this course are available on SCI's website for anyone who has the time and interest to look at the situation in depth. The course modules can be accessed here:


    Edward J. Dodson, M.L.A., Director
    School of Cooperative Individualism

  19. Interest rates are down now in the middle of 2019. I know her prediction was based on how strongly the Federal Reserve Bank's tone was last year about their insistence on 3 more rate hikes in 2019. However, they have all but stop raising rates for at least 2019. Time for refinancing and for those who need houses, it could be the right time again to pull the trigger.

  20. 100% on the money. Homes will continue to sell and at much higher prices. It’s a supply demand issue at this point.

  21. This video is confusing. Which country, state/province, city is she talking about? Detroit Market is different from Port Huron… London Market is different from Toronto…. Never trust an economist with a lame haircut!

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