If you’re thinking about buying a home, you’re probably curious about what real estate will look like in 2019. Will the starter home market continue to favor sellers, prompting bidding wars? What’s going to happen to interest rates? What trends are luxury buyers loving?
We don’t have a crystal ball, but we do have experts and data analysts who are making some confident predictions for real estate in the New Year.
Here are some of the biggest trends you can expect to see in 2019 when it comes to home buying and selling. (Spoiler alert: You’re in a great position if you’re looking to upgrade your home).
More Luxury Homes Will Be On The Market
Over the last few years, housing inventory has been historically low, creating a seller’s market. Homes hit the market and get snapped up quickly. In 2019, inventory is expected to see modest growth, increasing by 7 percent, according to the real estate experts at Realtor.com. But the luxury housing market will witness even larger growth, with some areas—including San Jose suburbs—experiencing inventory growth in the double digits. This is great news for those who are looking to upgrade from starter homes to high-end homes. According to Luxury Home Marketing, the inventory is increasing partly because ultra-high priced luxury homes are selling at a slower rate than in past years.
Wellness Is An Emerging Trend In The Luxury Market
Luxury homes that incorporate wellness into their design are selling for 10 to 25 percent more, according to a report from Luxury Home Marketing. This goes beyond simply having space for a home gym, though. The homes are designed to tackle modern problems, such as sedentary lives, unhealthy diets, social isolation, and not enough time in nature. We’re interested in seeing what this ends up looking like in future home designs and renovations, but the report hints at properties built with panoramic views of showcasing the outdoors and that are designed to inspire mindfulness. Luxury home buyers are also showing an increased interest in properties that feel exclusive, secluded, or rare, according to the report.
Starter Homes Will Likely Remain Hot Thanks To Millennial Buyers
In addition to inventory still being relatively low for starter homes, demand for modest-price homes will likely increase, points out a 2019 forecast from the Institute for Luxury Home Marketing. That’s because a large number of the millennial population will be turning 29 in 2019, and that’s an age when people get serious about entering the housing market. Experts from Realtor.com predict that millennials will continue to make up the largest segment of buyers in 2019, accounting for 45 percent of mortgages. Typically, that means current homeowners in the starter market can move up into the luxury space, but this could be delayed if interest rates continue to increase.
While the starter home market will remain in seller’s favor, sellers won’t be able to name their price, and expect bidding wars. This is a departure from past years, explains Realtor.com. If you’re listing a price above the median, you may need to come down in price or offer incentives. Still, experts say you can expect to make a good profit.
Interest Rates Are Expected To Increase
Experts tend to agree that there will be interest rate increases next year, but how much is up for debate. For example, Realtor.com is predicting that rates will average 5.3 percent throughout 2019, reaching 5.5% by the year end for 30-year fixed mortgages. Meanwhile, the Mortgage Bankers Association predicts a more modest increase, with 30-year fixed rates climbing from 4.8 percent at the beginning of 2019 to 5 percent by the end of the year. To stay on top of this trend, you can check out Eave’s real-time rate estimates here.
Home Prices Are Also Expected To Increase
Not only are interest rates projected to rise, but home prices are also expected to go up. CoreLogic, a data and analytics firm that analyzes real estate trends, released a report in December 2018 predicting home prices will increase 4.8 percent by October 2019. That compares to a 5.4 percent year-over-year increase between 2017 and 2018. Realtor.com points out that while there are more homes on the market, a good chunk of the new inventory is in the mid and higher-end price tier. This will make it tough for first-time homebuyers, but could help those who are wanting to upgrade.
One final and fun note for those planning to make a move in 2019: Buy some throw pillows or a piece of art in a coral hue! Pantone Color Institute dubbed “living coral” its 2019 “color of the year.”
Gearing up to buy in 2019 and have home financing questions? Eave is here to help! Please visit our website to speak with one of our licensed loan experts today.