As we 2019 begins, 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
Here is Part 2 of the nine real estate trends in 2019. You can read Part 1 here.
Willing to put in sweat equity – Most Realtors hate HGTV type rennovation shows because they tend to sugarcoat the process and leave out the difficulties that come along with buying a fixer upper. Realtor.com magazine disagrees in this post about five trends for the Millennial generation, where it claims these shows actually put this younger generation in a better position to handle renovation projects than the older generations. Older generations never had the privilege of watching programs about renovating homes so they don’t know the signs of a bad property, nor have any idea of rehab costs. It should come as no surprise then that many of the younger generations are perfectly fine with buying a property that needs some work to make it a home. In fact, these HGTV programs have done an excellent job of teaching its viewers that ugly wallpaper or bad floors can be overlooked when house hunting because you can fix the ugliness yourself.
What does this mean for sellers: If you have a property that is not in perfect move-in ready shape, you might think about an option of fixing any expensive repairs like roof replacement or foundation leveling, but lay off doing any upgrades to the house itself. Many younger generations are very cost conscious when it comes to purchasing a home and are willing to over look outdated items if they can get the size and floor plan they want in a property. It is best to speak to your listing agent about taking the fixer upper approach, because you will generally get less for the fixer upper than a move in ready home, but you won’t have to invest as much into the home repairs initially.
What does this mean for buyers: If you are a member of the younger generation, fixer uppers give you some more options in a tight seller’s market. Many sellers will be hesitate to invest heavily in a home for the sole purpose of selling it and prefer to put it on the market as a fixer upper. If you are willing to put in the sweat equity, the number of homes meeting your basic “want’s list” will increase to make it slightly easier to find a home that you can make your own.
Modest Inventory Gains – Many publications indicated that the tight inventory will continue to be a challenge in 2019. However, there will be slight inventory gains that will help offset some of the pricing challenges the market has faced in recent years. Reatlor.com 2019’s forecast points out that more homes will be put on the market, either via resale or new construction (see next trend to learn more about new construction). In addition, we are seeing less homes being sold. These two combined developments will help buyers in 2019 since the inventory will not getting any worse in 2019. Realtor.com said the exception to this development will be luxury homes as the report forecasts “more high-end inventory growth in major metros with the largest increases expected in: San Jose-Sunnyvale-Santa Clara, Calif.; Seattle-Tacoma- Bellevue, Wash.; Worcester, Mass.-Conn.; Boston-Cambridge-Newton, Mass.-N.H.; and Nashville-Davidson– Murfreesboro–Franklin, Tenn. all of which could see double digit gains in inventory in 2019.”
What this means for sellers: Sellers should see the sales price appreciation tamper off in 2019 with the inventory situation getting better. It should still see a modest increase, but we won’t see double digit increases in most markets. Sellers waiting for the sales prices to hit the highest points might want to seriously consider listing their homes in 2019. You might want to take advantage of the many “what is my home worth” calculators available on the web today. If you can live with the price, you should reach out to your realtor about getting the listing process started.
What this means for buyers: Buyers who remain in the market should be seeing more options when it comes to available homes. It won’t be anything significant, but it will be enough to take the pressure off of seeing homes immediately after they come on the market. You will have future options if you can’t go out to see the latest one your Realtor sent you. If location does not play a key factor in selecting housing, you might even request your agent to find micro locations where a buyer’s market already exists, especially if you are an affluent buyer looking to purchase a luxury property.
New Construction will see an uptick. If it seems that home builders are still playing catch up from ten years ago when the market crashed, you wouldn’t be wrong. Many new homes are being built today, but it seems that no matter how quickly the builders build, it doesn’t seem to be enough to keep the inventory high enough to make a difference in the market. Many industry experts predicted new construction will see an increase, especially in strong markets in states like Texas. Mashvisor wrote on their blog that Dallas, Houston, and Austin will see many increases in new homes. As the new year progresses along, it will be interesting to see if the economy slows down these plans for new construction.
What this means for sellers: With new construction prices being higher (higher than $250K), sellers with higher priced homes will find themselves competing with the new construction properties. Sellers should discuss with their listing agent how best to get out in front of this competitor, especially if you live close to new developments. Hopefully, the listing agent will highlight the price escalation on almost every part of new construction. You get more for you money with a resale property. The old adage, you get “what you pay for” might actually work in reverse here as some new construction does not justify the higher prices.
What this means for buyers: Buyers will have even more housing options in 2019, which will help with the nerve wracking experience of the overheated market over the last four years. It will no longer be required for buyers to rush out to homes as soon as they are listed in hopes to get an offer into the listing agent before anyone else (still a good idea to do but not as big of a rush). Instead, buyers will have the security blanket of knowing that they can always build a home if their budget allows them the luxury. Buyers should be aware that most homes will take several months (six months to eight months) before they can move into them. It will be something buyers will need to plan against if they decide to build a new home.
Tax Law is still a mystery heading into 2019: The recent changes to the tax law is a hot topic in many of the posts about real estate trends in 2019. As you probably already know, tax law allows homeowners to deduct their mortgage interest and property taxes from their taxes. With the new law, it seems these will curtailed to some capacity, especially for higher end homes over $750K. What does this mean for the market in 2019? Buyer’s confidence will most likely will impacted. Buyers will hesitate, not wanting to rush out to get a home for themselves now that the tax benefits have been lessened by the new tax law. In fact, according to the Norada Real Estate Investments, the government agencies are already seeing a change in buyer’s attitudes towards the housing market in waning months of 2018. It is just a wait and see if this continues in 2019.
What this means for sellers: As with every other trends we have reported in his two part post, this trend will not be helpful to sellers as buyers are more hesitant to enter into the market. With less buyers, means less demands, which means more days on the market for most sellers. If you follow the advice found in the other parts of this post, you should be able to position your property in a light that puts it ahead of other listings. If you don’t like the idea of dealing with less buyers, you can always use one of the new “buy-now companies” that will buy your property without ever having to show it to a buyer. Check the next trend for how this might work for you.
What this means for buyers: It means you will have even more numbers to consider before purchasing a house. It is good to remember that the lost deductions are not significant enough to override the inherent benefits of purchasing and owning a home for your overall wealth. However, it can be a damper to the spirits if you were relying on these tax deductions to help with the bottom line. Buyers need to do one thing when it comes to these new tax laws: do the math! If it makes sense for you to purchase a home right now, go for it. If not, you can always wait and continue to save for a year or more to see how tax laws really do pan out for home buyers and sellers.
Technology continues to transform real estate: Homes will continue to advance technologically in 2019, according to many of the posts read for this story. No matter what other real estate trends were included in the posts, it always seems that technology placed significant as a very important trend in 2019 (as evidenced by this post from 360Training) In addition to homes becoming smarter, the real estate industry will continue its paradigm shift by offering easy transnational tools to home buyers and sellers. The days of calling up a real estate agent to do everything for you is slowly eroding as new technology makes it much easier for consumers to take a DIY approach to real estate. This technology, coupled with the reduced costs to customers, makes this trend for us the number one trend to watch in 2019.
What this means to sellers: History has shown with the introduction of any new technology, many industry paradigms begin to shift. Real estate is one of them when it comes how sellers can sell their homes today. There are some many companies offering revolutionary ways to sell your home that it is often difficult to keep up with them all. From Opendoor to Zillow, many companies seems to be in the “sell your home now” phrase of their evolution. Basically, sellers can forego the traditional route of listing their homes and sell directly to company, with each one handling the process slightly differently. Sellers will like the convenience of selling their homes this way, but should be aware of the fees involved. Many of these companies will actually cost you more than the 6% listing fees from traditional brokerages. You have to be careful and read all the fine print.
What this means to buyers: As with sellers, buyers can also benefit their pocket books from these technological changes. Many companies are now providing rebates on the traditional commission. Why? These companies are realizing cost savings from the technology that allows them to refund some of their commissions to the consumer. In these DIY models, buyers are left to do some things that would have been done in the past by the Realtor. If you don’t want to deal with the details behind the scenes of buying a home, you might want to stick with a traditional buyer’s agent.