Seeing home values through the noise for a perspective without warp.
The housing market outlook for 2019 is a bit wobbly and unclear. Analysts are leaning in different directions with varying forecasts, some optimistic and others not so much. Instead of wading into this topsy turvy field and giving you my two cents, let me just give you the facts, the things to consider if you’re thinking about buying a home this year.
In 2018 home sales slowed around the country, interest rates rose, and home values hit a ceiling. If you take that at face value, it appears as if the market is heading for a decline or at least a period of stagnation. However there are more factors to consider, like the region you live in.
In 2018 home sales slowed around the country, interest rates rose, and home values hit a ceiling. If you take that at face value, it appears as if the market is heading for a decline or at least a period of stagnation. However there are more factors to consider, like the region you live in.
Regional Market Health Varies As Widely As 2019 Market Prediction
The Baltimore region saw an extremely strong sellers market in 2018. In the spring and through the summer, homes were selling quick, and at prices we hadn’t seen since the early 2000s. More often than not, sellers were selling above their asking price and selling in the shortest time spans we’ve seen in more than a decade. The average time a home spent on the market in the Baltimore region in June was just 15 days.
The bubble we saw at that time did stop expanding and subsided somewhat, but it didn’t burst like some imagined. Home values dipped a bit, but for the most part values across the state have remained strong. That is partially due to a low supply of housing in Maryland and the demand outweighing the supply. This trend looks to continue, even with the market volatility we’re seeing today.
The bubble we saw at that time did stop expanding and subsided somewhat, but it didn’t burst like some imagined. Home values dipped a bit, but for the most part values across the state have remained strong. That is partially due to a low supply of housing in Maryland and the demand outweighing the supply. This trend looks to continue, even with the market volatility we’re seeing today.
Market Corrections and Their Impact
Interest rates have been decreasing for over a month in an attempt to spur buying and correct the stagnant national market. Maryland could be rewarded handsomely by seeing our steady home values rise alongside the lower rates.
The fears that plagued the stock market toward the end of 2018 and into 2019 are keeping a lid on interest rates. Buyers remaining cautious due to slow global growth, the impact Brexit will have on our economy, and most recently the government shutdown, should keep interest rates down near 4.5%.
Market watchers may also be concerned about declines in new and existing home sales - at times a red flag indicating a possible crash - but other factors could be at play here. Lower housing affordability in new construction could mean that the supply of homes simply aren’t within potential buyers’ budgets.
The fears that plagued the stock market toward the end of 2018 and into 2019 are keeping a lid on interest rates. Buyers remaining cautious due to slow global growth, the impact Brexit will have on our economy, and most recently the government shutdown, should keep interest rates down near 4.5%.
Market watchers may also be concerned about declines in new and existing home sales - at times a red flag indicating a possible crash - but other factors could be at play here. Lower housing affordability in new construction could mean that the supply of homes simply aren’t within potential buyers’ budgets.
Affordability Could Be The Key To Market Success In 2019
As prices rose in 2018, affordability declined. The mortgage rates that came with increased home values and interest rates put many would-be buyers out of contention. Fortunately enough, housing affordability is not merely a function of mortgage rates. Income also plays a large role in what makes housing affordable. And income levels remain on the rise.
If mortgage rates stay put and income levels keep increasing, we could easily see a nice buyers market this spring. The cherry on top is, supply also remaining tight. In this scenario we would see an increase in buyers competing for available homes and the values of homes rising as a result.
If mortgage rates stay put and income levels keep increasing, we could easily see a nice buyers market this spring. The cherry on top is, supply also remaining tight. In this scenario we would see an increase in buyers competing for available homes and the values of homes rising as a result.
Keep Your Eye On Key Factor
As we get ready for the spring, and the associated spike in home purchases, keep an eye on certain factors. Look at interest rates, home inventory levels, and the job market’s impact on income levels. See where each stands and know how to analyze them.
Consider the following general guidance:
If interest rates and home inventory levels remain low, and income levels remain high, it is very likely buyers’ interests will grow and we’ll see another seller’s market.
If interest rates and home inventory levels rise, and income levels are low it’s likely we’ll see a saturated market with low buyer interest due to concerns over affordability.
If interest rates stay low, and inventory and income levels rise, we should see a buyers market, as people will have more money, more homes to choose from and can obtain a mortgage at a low cost.
If interest rates and income levels rise, and inventory remains low we shouldn’t expect to see a drastic shift in the market. The extra money buyers make will be counterbalanced by the increase in mortgage expenses, and if there’s no new properties to entice buyers, they will most likely stay on the sidelines, much like we’re seeing now.
If you keep these factors in mind as your primary focus, you should be able to make a sound judgement about the market and when it’s a good time to buy.
Consider the following general guidance:
If interest rates and home inventory levels remain low, and income levels remain high, it is very likely buyers’ interests will grow and we’ll see another seller’s market.
If interest rates and home inventory levels rise, and income levels are low it’s likely we’ll see a saturated market with low buyer interest due to concerns over affordability.
If interest rates stay low, and inventory and income levels rise, we should see a buyers market, as people will have more money, more homes to choose from and can obtain a mortgage at a low cost.
If interest rates and income levels rise, and inventory remains low we shouldn’t expect to see a drastic shift in the market. The extra money buyers make will be counterbalanced by the increase in mortgage expenses, and if there’s no new properties to entice buyers, they will most likely stay on the sidelines, much like we’re seeing now.
If you keep these factors in mind as your primary focus, you should be able to make a sound judgement about the market and when it’s a good time to buy.
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