Reward yourself this holiday with a rest from your search for a home. The Holidays give us an opportunity to express the importance we place on friends, clients, and family. Reward yourself and your family with moments and memories of the holidays we all hold dear. As the decorative lights glimmer, we watch the eyes of children everywhere, sparkle and shine.
But after the holidays, as you resume your hunt for the ultimate reward of home ownership, we believe, this week’s blog will bring you invaluable advice and golden data on the real estate market.
By the way, the reward you are looking for might rest in Florida. If you desire a home in Orlando, you might find your pot of gold.
According to real estate prediction experts report, Orlando may be the “Hottest Real Estate Market for investors in 2019.” But, as we said, “that’s another story, for our next blog!”
Next week, we will look at the possible reward in the local real estate market. Now, let’s take a quick look at the National Scene. This is Part One of our Story. And then in Part Two, in our next blog post, we will check out the possible reward of house hunting in Florida.
Rewards Promised in National Real Estate Forecast for 2019?
It seems that all the experts, national and local have predictions for the real estate market for 2019. And as you might imagine, not all experts think alike.
However, in one area, most of the experts agree. What is likely to happen to the real estate market nationally in 2019 is complicated and a little uncertain.
The Urban Land Institute compiles an annual “Emerging Trends Report.” The report for 2019 trends stated, “the Urban Land Institute found that the only certainty in its outlook for 2019 was uncertainty.”
Likewise, they reported, “Expert analysis points to a more complex, multi-layered series of overlapping trends… with unpredictable results.”
Forbes Looks at 2018 & 2019: Rewards or Debits?
Looking at statistics from Forbes, the market in 2018 has been in real fluctuation. Forbes officials summed up some of the recent events.
“The year started with sky-high home prices…” It showed “historically low mortgage rates and a definitive upper hand for sellers.”
“In recent months, home price growth has faltered… “Rates have risen to their highest point in nearly eight years. And favor has started to shift from seller to buyer.”
What Reward Can Sellers, Buyers, and Investors Expect in 2019?
Experts from Forbes and others seem a little unsure about certain specifics. However, several conclusions have emerged.
And most of the predictions for 2019 agree with Forbes on these three predictions.
1. The first 2019 prediction: Mortgage Rates Will Rise, Not a Reward for Buyers
Mortgage rates are going to continue going up. That doesn’t sound very surprising to most of us. But, there may be some consequences.
Mortgage rates have risen at an almost constant rate. However, mortgage rates stayed and are still lower than those that existed during the “recession.”
And they are still lower (“below average”) than expected in view of the strong economic growth which has occurred. (Now, that is a reward for buyers!)
According to Forbes, this is about to change. In 2019, the 30-year fixed rate mortgages are expected to reach 5.8 percent. (Could this create a reward for sellers?)
Aaron Terrazas is the director of economic research for Zillow. His research points out that this is a “territory not seen since the dark of 2008 when rates were racing downward in response to the housing crisis.” (Such a prediction does not hint at rewards for anyone.)
If rising rates continue as forecast, several events are likely.
- Affordable housing will decline.
- Rising rates will increase dollar cost for the buyer.
- Demand for housing by millennials will increase.
- The value of homes will likely continue to rise due to millennial demand. (Again, this could suggest a reward for sellers.)
2. Second Prediction: The Home Buying Demand by Millennials Will Continues
Forbes concurs with other prediction experts. Millennials will continue buying homes despite the rising rates and values.
- Market conditions (affordability) may make some potential home buyers put off purchasing. This is due to higher cost and stretched pocket-books.
- The day may be saved by millennials. Odetta Kushi is a senior economist for the First American Financial Corporation. Odetta stated that “Millennial demand for homeownership was one of the biggest trends influencing the housing market in 2018. This is unlikely to reverse going into next year, the year after that, and many years to come.”
She added that this generation is “mistakenly portrayed” as preferring to rent. She points out that “the largest cohort of millennials will be turning 29 next year.” They will enter “peak household formation and home-buying age.” And this will increase “first-time buyer demand.”
- Home rentals will increase. The individuals that cannot find affordable homes to purchase will add to rental upsurges. U.S. Census Bureau and First American are predicting huge purchasing increases. In the next 10 years, Millennials will purchase approximately “10 million new homes.” (This could bode well for the economy. We don’t ignore economic rewards.)
- It was also estimated that by 2060, that the Millennial-“generation will have produced more than 20 million first-time homebuyers.”
3. Third Prediction: Majority of Buyers in 2019 Will be Millennials
From studies that have been conducted, this seems a logical conclusion. There some very interesting statistics provided by Danielle Hale, Chief Economist for Realtor.com
- Millennials account for “45 percent of mortgages, compared to 17% of Boomers, and 37% of Gen Xers.
- First-time buyers will struggle next year, older Millennial move-up buyers will have more options in the mid-to upper-tier price point and will make up the majority of Millennials who close in 2019.
- Looking forward, 2020 is expected to be the peak Millennial home buying year with the largest cohort of millennials turning 30 years old.
- Millennials are also likely to make up the largest share of home buyers for the next decade as their housing needs adjust over time.”
A Special Holiday Message
We congratulate you and your families as you celebrate the Season of Christmas, Hanukkah, Kwanzaa, Winter Solstice, and New Year’s.
Also, we genuinely thank you, old friends and new, for the friendship and business you have brought to us.
You are our main reward. We could not enjoy our success if it weren’t for your confidence and trust.
Palm State Mortgage Company thanks you for your support, and wishes you the Happiest of Holidays!