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Top 5 Real Estate Trends to Watch for in 2019

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Top 5 Real Estate Trends to Watch for in 2019

Andrew Bayon
Jan 21 7 minutes read

Welcome to 2019, where you're likely to hear, "Let the old year end and the New Year begin with the warmest of aspirations, Happy New Year". With that being said it's a time to look ahead, form new ideas, make new goals, & achieve prosperity.

If those goals entail buying your own home, be on the lookout for today's changing market. Identifying the housing markets’ leading indicators is the key to predicting future price movements.

As more people look to upgrade into a new home this year, many are also looking towards the market to see what's going on. Take a look at what the forecast for 2019 might hold for buyers and sellers.

1. More Homes Means More to Choose From

2018 was a good year for Real Estate, for many reasons. In the Fall all over the United States, we saw inventory increases for the first time in a long time. Even in Tampa, we saw an increase from less than 2 months of inventory "nearly nothing" to 3 months of inventory "something".

For buyers, this is a positive sign that there is a little more to choose from. 

We have been keeping an eye on home sales over the past several years. Homes have been hitting the market and builders have been building, but the number of homes hitting the market was not meeting the demand for homes, definitely new homes.

In fact, last winter in the United States inventory hit its lowest level, but this year it finally began to recover. As more homes enter the market, sellers now have to think more about their competition. It's not going to be as easy as it has been in recent years.

While inventory growth is expected to be low, not the same thing can be said for the more expensive markets. These markets typically have strong economies and most of the expected growth will be directly from luxury listings.  

High-end metro markets could see double-digit gains in 2019. While new construction is still slowly lagging behind in inventory, we will likely see some growth this year.

2. Tough Buyers Market

It's been a seller's market for years we are finally beginning to see some change that could prove otherwise.

On one side of the coin, home buyers life will be easier as they have a plethora of options. On the flip side, the future for home buyers is questionable as mortgage rates continue to increase. In addition to mortgage rates, we will see home prices climb and affordability will continue to be a touchy topic for buyers moving into 2019.

As the lower market gets squished by raising prices, increasing costs for land and to build, some price ranges may be competitive. 

In fact, last winter in the United States inventory hit its lowest level, but this year it finally began to recover. As more homes enter the market, sellers now have to think more about their competition. It's not going to be as easy as it has been in recent years.

While inventory growth is expected to be low, not the same thing can be said for the more expensive markets. These markets typically have strong economies and most of the expected growth will be directly from luxury listings.  

High-end metro markets could see double-digit gains in 2019. While new construction is still slowly lagging behind in inventory, we will likely see some growth this year.

3. New Dominating Market

Who do you think is the biggest generation group for home buyers? - Yup, you guessed it, Millennials account for nearly 45% ( compared with 37% Gen X and 17% for baby boomers). It wasn't too long ago that millennials were barely old enough to afford their own homes and now some are even moving up from their starter homes.

As we stated above, it will be very difficult for first-time buyers. Homeowners that leveled up will reap the benefits of their home equity and the prudent decisions they made in the market. 

This leading generation of home buyers is going to have to be more price-conscious than any generation before. Mainly due to the fact that they are carrying massive student debt and want the ability to indulge in life experiences such as traveling. Money that should be put aside for a down payment or mortgage payments.

Millennials choose experiences over material possessions and they need to maintain a certain lifestyle. But they still see the value on owning their home.

Due in part to heavy debt, 70% of Millennials own property that's less than 2,000 square feet. They're more likely to settle on distance from certain amenities or urban areas. 2020 is where we anticipate the pinnacle of millennial home buying - at the age of 30. For the next decade, millennials will acquire the largest share of home buyers.

4. Uncertainty In The New Tax Law

At last year's forecast, the tax code was still being battled around Congress. The talks were believed to discourage home buying but nobody really knew it would impact the real-estate market.

Well here we are... still uncertain. Most taxpayers will be filling under the new law in April 2019. Some people may have the luxury to have a tax adviser to discuss the ramifications on what to expect, but for many, the information will come in the form of a larger tax bill - or if you're lucky a hefty refund.

Renters are the most likely to have lower tax bills and won't be pressured to buy while affordability is up in limbo.

Those who currently own a house or want luxury market homes are going to pay a lot more with the new tax plan. Sellers of pricier homes are also going to take a hit as buyers are expecting bigger tax bills and aren't as willing to meet demands to pay a lot more for a high list price.

As a result of the new tax law, we expect mortgages to take the biggest hit since people are less willing to take out large mortgages. Mortgage bankers have the most to lose.

5. New Construction Home Demand

A myth is that "new homes" are more expensive than existing homes. In some cases, they can be, and if you aren't comparing apples to apples it could look like they aren't.

What is also not considered is the cost of owning an existing home. Maintenance is a major contributing factor, and a major reason many homebuyers consider new construction.

"The nationwide average cost of tasks like house cleaning, lawn care, carpet cleaning, central air and heating system repairs, gutter cleaning, and pressure washing is about $3,070 per year. As labor costs vary in different parts of the country, these jobs can be much more expensive depending on where someone lives." - Zillow

While new construction is seeing inventory increases it has not met the current demand. Many homebuyers who are looking to upgrade to a new home are looking towards new construction due to its "newness", never used, low maintenance, "best value for your dollar" properties.

As more repeat buyers and those who are moving from renting to owning look at new homes, we will need to see an increase in permits to keep up with the current demand.

How the home buying process should be. 

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