Looking to buy a home? 2019 may be your year. According to a new report from CoreLogic, experts predict that this year’s real estate market may swing in favor of buyers.
What is causing this shift isn’t necessarily news to potential homeowners: again, it’s a story of increasing home prices and rising interest rates. However, it seems like these factors are finally hitting the market hard enough to cause a change.
Over the last several years, home prices have steadily increased. This has deterred some buyers, as home prices in many areas have climbed beyond the average person’s reach (we’re looking at you, San Jose!). Nationally, home prices have increased by 5.1 percent on average between November 2017 and November 2018, according to the CoreLogic Home Price Index. Even places like Idaho and Nevada, which aren’t traditionally hot markets, saw home price growth spike into the double digits. The only state to show a decline in prices year over year was North Dakota (If you’re looking to move to ND, taxes are nice up north!)
Adding to these steep asking prices, interest rates for new 30-year fixed-rate mortgages are higher than they have been in almost eight years. The average interest rate for that kind of home loan clocked in at 4.9 percent in November 2018. Because it’s becoming more expensive to buy an already pricier home, more potential home buyers are expected to stick to renting for a couple more years (at least).
Though this will stall sales for a bit, the good news is that experts predict the market will finally say, “enough!” Though home prices may continue to increase, it will be at a less steep rate than the past several years. The CoreLogic HPI Forecast predicts that home prices will increase by 4.8 percent between November 2018 to November 2019. With fewer people able to buy houses, sellers eager to move their properties may be forced to lower their asking price in order to find a buyer.
Playing into all of this, too, is that an unstable economy may cause homeowners to lose confidence in how much their home is actually worth—making it easier to accept lower bids they once wouldn’t even consider. A CoreLogic Market Condition Indicators analysis found that 35 percent of the U.S.’s 100 largest metro areas have an overvalued housing market—meaning home prices are at least 10 percent above what can be considered stable long-term.
“A strong economy helps homeowners feel confident about the value of their property,” said Frank Martell, president and CEO of CoreLogic, in the report. “If recent declines in the stock market shake consumer confidence in the national economy, we may see homeowners’ perception of home value change and a subsequent buyers’ market emerge in 2019.”
Are you looking to buy this year?