4 Key Home Buying Trends to Watch in 2019

As we look ahead to coming trends in 2019 real estate, home buyers and sellers nationwide will face changes in the marketplace, according to the economic research team at realtor.com. From housing inventory to generational shifts, here are four top trends to look for in 2019.

1. Inventory will grow, especially for luxury homes

Inventory has been tight nationwide, hitting its lowest level in recorded history in the winter of 2017, says realtor.com. Supply finally began catching up with demand in 2018. That inventory growth will continue in 2019, but at rate of less than 7 percent. While sellers will have more competition, it will still be a good market.

“More inventory for sellers means it’s not going to be as easy as it has been in past years—it means they will have to think about the competition,” says Danielle Hale, realtor.com chief economist.

“It’s still going to be a very good market for sellers, but if they’ve had their expectations set by listening to stories of how quickly their neighbor’s home sold in 2017 or in 2018, they may have to adjust their expectations,” she adds.

In markets with strong economies and high-paying jobs, most of the expected inventory growth will come from listings of luxury homes.

2. Affording a home will be challenging

Interest rates and home prices are expected to continue to increase. Hale says homebuyers will continue to feel a “pinch” from affordability, as costs will still be a pain point. She predicts mortgage rates will reach around 5.5 percent by the end of 2019, which translates into the typical mortgage payment increasing by about 8 percent. Incomes are growing about 3 percent on average. These factors are hardest on first-time home buyers, who tend to borrow most heavily.

3. Millennials will dominate

Millennials are now the biggest generation of home buyers. Some are first-time home buyers, while others are moving up from starter homes. The millennial group accounts for 45 percent of mortgages compared with baby boomers and Gen Xers at 17 and 37 percent respectively, reports realtor.com. And many millennials still have student debt, which adds to the challenge of affording a home.

4. The new tax law’s effect is still unknown

For many tax filers, the effect of the new tax law won’t be known until their April tax filing results in a bigger tax bill or a bigger refund.

Renters are likely to have lower tax bills, but the new increased standard deduction reduces the appeal of the homeowner’s mortgage-interest deduction. The new tax law may dissuade people from taking out large mortgages which will affect higher cost homes. Add these factors to the challenge of affording a home and homeownership for some may be harder to achieve or less appealing.

The net effect of the coming 2019 trends is that even with these challenges, sellers are in a good position and homeowners will continue to enjoy positive financial gains from their home.

For more information, read the full report at https://www.realtor.com/news/trends/real-estate-trends-expect-2019/

 

Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Thursday, January 10th, 2019 at 10:05am.

Posted on January 10, 2019 at 11:51 pm
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The one statistic every renter needs to see

By Jay Kalinski — 

That’s right, based on the latest available data from the Federal Reserve Survey of Consumer Finances, the average net worth of a homeowner is $231,000, a whopping 44 times greater than the average renter’s $5,200 net worth.  What makes the situation more dire is the fact that the gap is widening.  From 2013 to 2016, the average net worth of homeowners increased 15 percent while the average net worth of renters decreased by 5 percent. The situation for renters is bad and getting worse.

More than any other factor I could identify, homeownership best explains the gap between the haves and have nots. People seem to understand this fact, as a Gallup poll showed that Americans chose real estate as the best long-term investment for the fourth year in a row. So, why aren’t more renters buying homes?

Desire?

It could be that renters do not want to own homes. Anecdotally, we hear stories about how Millennials prefer to rent to give them a more flexible lifestyle, but the research tells a different story. In fact, Millennials represent the largest share of homebuyers today and only 7 percent of respondents to an NAR survey said that they did not want the responsibility of owning. More generally, 82 percent of renters expressed a desire in the fourth quarter of 2017 to be homeowners and about the same percentage said that homeownership is part of the American Dream.

What is driving this desire for renters to become owners? According to a recent survey, the main reasons renters would want to buy a home are: a change in lifestyle such as getting married, starting a family or retiring; an improved financial situation; and a desire to settle down in one location.

Renters seem to know that owning a home is a great investment, and they overwhelmingly express a desire to do so, and yet something is preventing many of them:

Ability

Based on a recent NAR survey, it appears that ability (perceived or actual) is the biggest obstacle to homeownership. In fact, 66 percent of renters reported that it would be somewhat or very difficult to save for a downpayment on a home. Only 16 percent said that it would not be difficult at all. Of those who said saving for a downpayment was difficult, 49 percent identified student loans, 42 percent cited credit card debt, and 37 percent cited car loans.

The above, however, only focuses on one aspect of home affordability. Another side is home price appreciation.  That is, if homes were more affordable, it would be easier to save for a downpayment.  Unfortunately for local renters, Boulder County has appreciated more since 1991 than any other area in the country — more than 380 percent! The average single family Boulder County home topped $708,000 in February 2018, which is almost 20 percent higher than two years ago.

In addition, interest rates are on the rise in 2018, and we’ve already covered how a 1 percent increase in interest rates can reduce your purchasing power by 10 percent.

Takeaways

There are two takeaways from this. First, for renters, you may be familiar with the adage “The best time to buy a home was 30 years ago. The second best time is now.” That is true now more than ever. If you have been considering making the jump to homeownership, now is the time. At this point, each day delayed likely equals less home for the money.

Second, for local government officials, if you truly support the idea of affordable (market rate) workforce housing, you have the power to encourage it. Without you, the affordability situation will only continue to deteriorate.

Jay Kalinski is broker/owner of Re/Max of Boulder.

 

Posted on April 10, 2018 at 7:51 pm
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