December 31, 2018
Many believe that there is a tougher road ahead for homebuyers and sellers in 2019.
Yes, rates have come down in the last month or two but buying a home may be an even more expensive undertaking in 2019 as mortgage rates and home prices increase. Although the number of homes for sale is increasing, which is an improvement for buyers, the majority of new inventory where Orion’s brokers are is focused in the mid-to higher-end price tier, not entry-level. Rising mortgage rates and prices will keep a lot of new inventory out of their budget and make it especially tough for first time home buyers.
Although it remains a seller’s market, sellers will need to be mindful of their increasing competition and shouldn’t necessarily expect to name their price and get it in full. With less demand in the market, there will be fewer bidding wars and multiple offers. Our brokers are indeed seeing that.
Inventory hit the lowest level in recorded history last winter, but finally bottomed out and reached positive territory in October. National inventory increases will remain low in 2019 at less than 7 percent. High-priced markets are a different story. Most of the inventory gains have been in upscale homes in high-growth markets, which suggests higher prices are incentivizing sellers, and many experts believe we’ll see more high-end inventory growth in major metros.
Broker’s clients in their 20s and 30s will continue to make up the largest segment of buyers next year, accounting for 45 percent of mortgages, compared to 17 percent of Boomers, and 37 percent of Gen Xers. While first-time buyers will struggle next year, older millennial move-up buyers will have more options in the mid-to upper-tier price point.
In April 2019, taxpayers will go through the income tax process for the first time since the new tax plan. For most renters, the results will be good: lower rates and a higher standard deduction should amount to lower tax bills. For homeowners, it’s a mixed bag. Some will benefit from lower rates and a higher standard deduction, but many others will find limited itemized deductions and personal exemptions mean a higher tax bill. While many factors influence home sales, it could be the case that without homeownership incentives some renters are holding off on buying.