Markets are like the weather—you can’t entirely predict how they’ll act, but you can get a sense of the forces that may push things in one direction or another. We’ve analyzed a wealth of housing data to come up with a forecast of what 2019 might have in store for homebuyers and sellers. Here are our top takeaways:
First, we’ll have more homes for sale, especially luxury homes. We’ve been chronicling the super-tight inventory of for-sale homes for several years now. Yes, homes have been hitting the market, but not enough to keep up with the demand. Nationwide, inventory actually hit its lowest recorded level last winter, but this year, it finally started to recover. We’re expecting to see that inventory growth continue into next year—not at a blockbuster rate, I’m afraid, but at around a 7% growth rate.
While this is welcome news for buyers who’ve been sidelined, sellers must confront a new reality. Although 2019’s inventory is expected to be modest nationwide, pricier markets will tell a different story. In these markets, which typically have strong economies and high-paying jobs, most of the expected inventory growth will come from luxury listings.
So, buyers or sellers: Who has it better? It’s no secret that home sellers have been sitting pretty for the past several years, but is the tide about the change in the buyers’ favor? Well, in some ways, life is going to be easier for homebuyers; they’ll have more options, but we also expect mortgage rates and home prices to continue to increase.
Another trend to pay attention to is the behavior of millennials in the market: Millennials are expected to dominate home buying in 2019. They were only recently the new kids on the block, but no longer—millennials are the biggest generational group of homebuyers, accounting for 45% of mortgages, compared to 17% for baby boomers and 37% for Gen-Xers.
Millennials, who range from their mid-20s to their late-30s, are even moving up from their starter homes. The slightly older move-up buyers will reap the benefits of both their home equity and the increased choices in the market.
Finally, we come to the new tax law. It’s still a wild card. At the time of last year’s forecast, the proposed revision of the tax code was still being batted around by Congress. While there was talk that it might discourage people from buying a home, no one really knew how it might affect the real estate market, and we still don’t know for sure. That’s because most taxpayers won’t be filing taxes under the new law until April, and while some people might have a savvy tax advisor giving them a better idea of what’s in store, the reality check will come in the form of a bigger tax bill or bigger refund. Renters are likely to have a lower tax bill, but they may not be tempted to buy, since the increased standard deduction reduces the appeal of a homeowner’s mortgage interest deduction.
If you or someone you know could use some advice about the real estate market, The Dailey Group is here to help you and those you care about move with confidence.