After the Great Recession of 2008, it took some time for the housing market to rebound. Since then, as the economy recovered and unemployment started to fall, the supply of housing in the United States could not keep up with demand. Housing prices rose, but by 2018 interested rates were also well on the rise, and homes became relatively less affordable.
Looking into 2019, several trends in the housing market stem from the previous decade in the housing industry. One primary factor that will affect the housing market in 2019 is that, like the past several years, the economy is still strong, and unemployment is low. In general, household income continues to grow, and there is a relatively high savings rate. People have the means to buy houses and take on mortgage debt in 2019.
For buyers, even if they can take on a mortgage, it may not be enough, as many homes selling in 2019 are in the mid to high-end range. Because in recent years there was a trend of rising prices and low supply, buyers in 2019 should not expect to secure significant price discounts. This trend could particularly hurt first time buyers, where negotiating down a price on a mid-range house may be unlikely.
Buyers should also keep an eye on the Federal Reserve and interest rates. As interest rates have risen over the past two years, so have mortgage rates. The trend in 2019 seemed to be a continued rise in interest rates. However, the Federal Reserve has paused interest rate hikes. If rates start to rise steadily again, home affordability becomes more difficult.
From a seller’s viewpoint in 2019, expect prices to rise at a slower rate than over the past few years. In general, the days of bidding wars may be coming to a close in many areas, but overall demand for housing is still strong. Millennials are also increasingly looking to step into home ownership, and the size of that cohort will continue to drive demand in the market.
The overall theme in the housing market in 2019 is that there will be growth and price gains, but not at the pace of the last few years. The National Association of Realtors thinks the median home price will increase by about three percent in 2019, and they expect home sales to rise one percent year-over-year.