Nine Real Estate Trends to Watch in 2019 – Part 1

As we approach the end of 2018, it is always an interesting exercise to tackle the real estate trends of the upcoming year.   We decided to do it differently this year by exploring some of the other posts on the subject to get nine (trends) for 2019.   After scanning several articles, we came up the following list, broken into two parts,  of what we thought represented the most frequently occurring 2019 real estate trends.

Trend analysis is an important exercise for buyers and sellers to undertake as a way to build their strategy for their real estate endeavors.   You can build a nice plan by knowing the real estate trends experts are expecting to take center stage in 2019.    The plan can include a overall approach to buying or selling real estate, but might have some flexibility to move tactically in case one of these real estate trends does not come to pass, or is minimized in some fashion.

Why is a strategy even necessary for a personal residence?  It is not a business that requires certain objectives or goals to be reached.   Real estate is a complex process, even if you get the help of professionals like a realtor or a mortgage lender.   Even if you are not grading the end result by looking at specific milestones, you should always have some idea on how you wish to approach the house hunt or the sale of your home.   The plan will make the journey much easier to undertake by allowing you to anticipate the highs and lows real estate brings with it.   If you have an inkling of what is to come, the stress of the process is lessened as you are better prepared to meet the challenges firmly.

With each real estate trend, we will attempt to provide some advice and guidance on how you can use this information in mapping out your real estate route in 2019.

Mortgage Rates will Continue to Rise  – This Forbes post gets to the point very quickly on what to expect with 2019 real estate trends.   Its very first trend is the looming rise of the mortgage interest rate.    The author highlights a quote from Zillow’s Director of Research, Aaron Terrazus, where he predicts we will see the mortgage interest rate increase to 5.8% in 2019.  This is the highest the rate has been since before the 2008 crash.  We saw this particular real estate trend more than any other in our a research of the various real estate trend posts.

What this means for sellers:  Sellers should realize that higher interest rates mean the possibility that many potential buyers will walk away from the market as it might actually be cheaper to rent than to purchase a home in some markets.   With less buyers, the torrid pace of the market will be slower in 2019.  It will still be active in many cases, but we most likely not see buyers lining up outside a house for a chance to see it.   It will still be a seller’s market, so if you are planning on selling, you should still move forward.

What this means for buyers:   Buyers will be able to afford less house as the mortgage rate increases to these new heights.   Buyers will also face higher monthly mortgage payments after purchasing the home.    Buyers need to lower their expectations and be willing to look at homes in a lower price range than they might have in 2018.   Buyers should utilize one of the many calculators online to get an idea on monthly mortgage payments.   If the payment still looks manageable, call a mortgage professional to discuss the matter further.

The Acute Affordability Crisis – Over at Curbed, they wrote a nice post on the Urban Land Institute’s annual report on real estate trends.   One of the most pressing real estate issues, according to the land institute, will be the affordability crisis we are facing in this country.   Specifically, this post focuses on the rental market getting out of hand for the average American.   We did see several other posts in our research that spoke on affordability crisis for owning a home as well.   The Urban Land Institute quotes HUD, who claims that 12 million Americans currently spend more than 30 percent on their housing costs.  With the increase in single family residence values and a growing mortgage rate increase, the affordability of housing costs will decrease another 15% in 2019.

What this means for sellers:   Sellers with homes above $200K will face stiffer competition in 2019 as most buyers will only be able to afford homes at a lower price point.  Sellers in this price range should work with their listing agents to do the things necessary to make their homes stand out from the crowd including pricing the property correctly, making sure the house is presentable at all times (clean with no clutter) and keep the curb appeal at its highest.

What this means for buyers:  Here in Fort Worth, we have a distinct shortage of housing available(both rentals and purchase) at rates that most can afford.   The number of homes below $200k continue to be very low, which pushes many buyers out of the market.  Buyers should remain diligent, however, and work with their buyer’s agent to get them on an MLS email list that alerts buyers of homes in their price range and fitting their specific needs.   Every market will have it challenges, and if you are stubborn enough to not give up at the first frustrating event, you can find a home.

Millennial will still dominate home buying – It wasn’t long ago that many thought this generation of buyers would never be interested in owning a home for themselves.   It was thought that with student debt and their need to continue having a life outside of the home, that many Millennial would lack the required funds to purchase a home.  With them getting older, this is no longer the case.  We read many posts about real estate trends that ranked the continuing purchase power of the Millennial generation as being one of the top developments in 2019.  Realtor.com ranks it as the number third trend in their post with an expected 45% of mortgages to originate with this younger generation.   Some in this generation are even moving into their second homes.   Many of them are doing it without breaking the bank either, being more cost conscious with the added expenses of their chosen lifestyles.

What this means for sellers:  With their approach to getting a good home for their money, many of this generation are settling for smaller homes.  If you are trying to sell a smaller home, you would be wise to investigate some of the amenities that this generation enjoys like plenty of tech connectivity,  newer modern fixtures and updated kitchens/bathrooms.   Many of this generation will also consider their pet and whether your home is pet friendly.  If you have a nice yard, be sure to have your listing agent brag about it in your listing.

What this means for buyers:  If you are part of this generation, you have some sellers who will be looking to sell to you and most likely will present their homes in a way to appeal to you.   You can be more picky about properties matching more items on your “wants” list.   If you come from another generation, be prepared to some increased competition from the younger generation, who tend to be aggressive to get what they want in their lives, including their homes.

Baby Boomers are Moving out –  Empty nesters are still moving out of the homes where they raised their children.  Many still see the large empty homes as a waste of resources and want to take advantage of the equity built up into their homes.   This post from the Realty Biz News sees an opportunity here for multifamily developers as many of these baby boomers are taking the option to move into lifestyle communities for people of their age group.   With so many of them living longer and having more active lives in retirement, it only makes sense that they would want to keep their options open where they live so they have plenty of entertainment and networking opportunities.

What this means for sellers:  If you are a baby boomer looking to downsize your home, you want to discuss with your realtor the updates you need to your current home to attract modern day buyers.   Many older home owners did not update their homes, too busy living their lives to worry much about the latest design trends.   You have to balance the update with the money invested in it.  You don’t want to overspend, because the market will only accept certain price points for your neighborhood.  If you update too much, you might never see the money back when the house sells to the buyer a lower price than you might expect considering the updates.

What this means for buyers:  With many baby boomers selling their large homes, many first time home buyers from the last decade will have options when it comes to moving up their residences.   These buyers should work with a mortgage professional to determine the best strategy to use their built-in equity from their current homes.  What is the best approach to getting a mortgage when you already own a house?   What are the downfalls?  What are the advantages?   You should also discuss contingencies with your realtor and be sure to understand them fully before moving forward in selling your home (and buying a new one).

Be sure to check back for Part 2 for the Nine Real Estate Trends to Watch in 2019 next week where we will go over sales price growth, sweat equity, the tax law and new construction.