The year 2019 offers great promises for the country’s real estate market in general. While 2018 showed the market on the downside for the rest of the year with rising house price rates and more people prefer renting than buying a house. Now it’s a start of the year and experts often give forecasts as to what will happen in real estate in the next 12 months.
Financial Samurai wrote an article on their website about the time to start worrying about the housing market again. Read the article below to learn more if 2019 is really a good year for real estate.
It’s Time To Start Worrying About The Housing Market Again
Image Source: Financial Samurai
Despite publishing cautionary posts about investing in stocks, bonds, and alternatives at current levels, the biggest caution I should be writing about is taking out massive debt to buy property at record highs.
If you lose 50% on your stock and bond portfolio, you’ll be upset, but fine. If your property loses 20% of its value, however, this means you’ve lost 100% of your 20% downpayment. In this scenario, you’ll also probably still be fine – if you don’t have to sell. But when property prices correct by 20% or more, many people become forced sellers because they’ve also lost their jobs.
I understand that millennials are coming of buying age and inventory is on the decline, making competition for buying a home fierce. However, only if you are fully cognizant of the following points I’ve highlighted below should you proceed with a property purchase today.
Things To Know Before Buying Property Now
1) Rents have softened from peak levels in many of the most expensive cities. Given property prices are a function of rental income multiples, a real estate buyer should be looking to buy at similar pricing discounts from peak rental periods. For example, research whatever comparable New York property you want to buy today that was sold for in March 2016 and aim to buy at a 14.8% discount to the March 2016 price because that’s how much rent prices are down.
In 2017 I experienced softening rents first hand when I tried to find replacement tenants for my SF rental house at a similar rent of $9,000 a month. After 45 days of aggressive marketing, I only got two offers, both for $7,500 (-16.7%). I even hired a rental listing agent for two weeks to find people for at least $8,000 and he failed. As a result, I sold. Pricing pressure starts at the most expensive markets and works its way down. The large supply of condos in many expensive cities has really put a damper on rents and housing prices. Click here to read the rest of this post…
Before dipping your hands into different types of real estate investments, never forget to have some due diligence in checking the market. Also, make sure to know the most important things before buying property for example. With the rental market have already softened from its peak levels in a lot of cities, which makes some home pricing discounts. That’s another thing to look forward to in 2019.
Brandon Cornett wrote an awesome outlook for the entire US real estate market in the year 2019 based on several criteria. Does the article aim at key questions such as will it be a buyer or seller’s market for 2019? and so much more.
Tight supply and strong demand have boosted home prices in housing markets across the country, while presenting challenges for buyers. Mortgage rates rose steadily during the first part of 2018, and then leveled off during the early summer.
That’s where we are now, as of July 2018. But what’s over the horizon? While no one can predict future housing conditions with complete accuracy, we can make a few educated guesses. Here are four of them.
1. We could see an increase in new-home construction.
We’ve seen a recent uptick in building permits nationwide, which could lead to a much-needed increase in new-home construction in 2019.
In a June 2018 report, the National Association of Home Builders stated: “Over the first four months of 2018, the total number of single-family permits issued nationwide reached 279,302. On a year-over-year basis, this is an 8.4% increase over the April 2017 level of 257,719.”
But there’s a pretty long lag time between the filing of a construction permit and the completion of the project. So the U.S. real estate market in 2019 will probably continue to suffer from supply shortages, with not enough homes listed for sale to satisfy demand from buyers. Which leads to item #2 below.
2. Most markets will still favor sellers over buyers.
Inventory shortages affected many housing markets across the country during 2017 and 2018. And this will likely continue, to some extent, in 2019 as well. Limited supply is also one of the reasons for prediction #4 below. An imbalanced supply-and-demand picture will continue to put upward pressure on home prices in 2019.
Of course, all of these trends can vary from one area to the next. Some real estate markets across the U.S. are more “balanced” than others, with enough supply to meet demand. Most cities, however, are experiencing low levels of inventory at present. The tightest markets are in the west — California, Washington and Oregon. But nearly every state is touched by this. Learn more about the outlook here…
The outlook for several real estate experts for the year 2019 showed some positivity in the sector in general. Expect a significant increase in home constructions as more firms applied for permits. Another important thing to look into is that also according to these experts, the market will also favor sellers over buyers. This trend, however, could have both positive and negative effects depending on what the market demands.
Now it’s the third quarter of the year 2019, it is high time that we evaluate what has been the real estate market trend to start the year. Is it good or bad? Is the market slowing down, or going on a fast movement? Alcynna Lloyd wrote an interesting forecast as to what happened in the housing market in February.
Freddie Mac: February Forecast Hints at a Mortgage Market Slowdown
Image Credits: Housing Wire
Freddie predicts lower mortgage rates will decelerate growth of total home sales
This year’s mortgage market is projected to grow modestly, as both mortgage and interest rates slide further, according to Freddie Mac’s February Forecast.
According to the government sponsored enterprise, U.S. GDP growth will fall to 2.5% in 2019, edging down to 1.8% come 2020. However, Freddie predicts the labor market will remain strong despite these economic headwinds.
Employment, which has been sitting at record highs, is forecasted to retreat slightly to 3.6% in 2019 before returning to a more sustainable long-term rate of 3.9% by 2020, according to the company.
Notably, the 30-year fixed-rate mortgage rate is expected to average 4.6% this year, eventually rising to 4.9% in 2020.
“We expect single-family mortgage originations to increase 2.6% to $1.69 trillion in 2019 and remain around that level in 2020,” Freddie Mac Chief Economist Sam Khater said. “With mortgage rates easing up since the end of 2018, we revised up our forecast of the refinance share of originations to 27% and 24% in 2019 and 2020, respectively.”
Freddie also notes housing starts will fall well below long-run demand, increasing to 1.29 million units this year and 1.36 million units next year. Learn more about the trend here…
With the first quarter of the year already finished, it is still unclear for some experts what could be the trend for the rest of the year. While it was also projected that the housing market will grow modestly due to interest rates sliding down, expects are bullish with the market in general.
With the current housing market favoring the sellers over the buyers, this is the perfect opportunity to sell your house fast. If you need some help in selling your home, we at Dependable Homebuyers can help you with everything you need in finding the right buyer. To learn more, visit us at https://www.dependablehomebuyers.com.
