Looking to buy or sell your home next year? Well, you better get ready for a rocky road ahead.
According to new data from Realtor.com’s 2019 housing forecast, rising rates and prices will make it more difficult to buy or sell a home next year.
The real estate website found that with mortgage rates expected to hit 5.5 percent by the end of 2019 and monthly mortgage payments expected to rise 8 percent, home ownership will be more out of reach – especially for millennials – than ever before.
These increases, says Realtor.com chief economist Danielle Hale, may force buyers to downsize the type of home they are looking for and may knock some would-be buyers out of the market entirely.
As for sellers, while the market will remain “a seller’s market,” a majority of them will need to be mindful of these increases and shouldn’t necessarily expect to “name their price and get it in full,” which is a major change from the past few years.
Additionally, above-median-priced sellers, may find that it will take longer to sell and require offering incentives, such as price cuts.
“With less demand in the market, there will be fewer bidding wars and multiple offers. However, with inventory expected to remain limited in most markets, sellers who price competitively can still walk away with a handsome amount of profit, but not the price jumps observed in previous years,” the report says.
Hale says her biggest advice for home buyers who are looking to buy next year, is to have a wish list that helps create a more focused search.
“Competition this year is more likely to come from finding a home that fits your budget criteria instead of from other buyers,” she tells FOX Business, adding that using online tools like home search features can help you target your home search and help you get pre-approved for a mortgage.
Another factor that remains a big wild card for the housing market next year is the new tax plan. Most renters are likely to benefit from it, as they will have lower rates and a higher standard deduction, which should amount to lower tax bills. But for homeowners, it’s a mixed bag. Realtor.com says some will gain from lower rates and a higher standard deduction, but many others may find limited itemized deductions and personal exemptions, which could mean a higher tax bill.
“Despite the fact that 2017 home sales were the highest they’ve been in over a decade, sales in 2018 started to decline immediately following the tax plan. While many factors influence home sales, it could be the case that without homeownership incentives some renters are holding off on buying,” the report adds.
Here are the key findings from Realtor.com’s 2019 housing forecast:
• Home price growth will continue to slow, with a forecasted increase of 2.2 percent
• Inventory increases will remain moderate with less than a 7 percent increase
• High-priced markets will buck the trend, with double-digit inventory gains
• Millennials will account for 45 percent of mortgages in 2019 vs. 17 percent for boomers
• New tax plan will be good for renters, mixed for homeowners