In the past few years, it’s been pretty sweet to be a homeowner, watching your gains accumulate, while home buyers have been up against diminished inventory levels, rising prices, and perpetually tight lending conditions.
So what does 2019 have in store?
Several optimistic brokers we spoke with believe prices will continue their current pace, some predicting as much as a 7.0 percent increase this year, while others believe it to be as little as 1.0 percent. But none indicated prices will stagnate or even drop.
Which seems to be the consensus.
So the debate brewing is perhaps more nitpicking than anything, but a debate it remains.
According to Case-Shiller, CoreLogic, home prices are predicted to increase another 5.0% in 2019 (and another 5.0% in 2020), and many experts add a caveat that the 2020 elections will be a strong driver in both years as uncertainty inevitably plays a roll in buyer sentiment.
A Reuters report indicates prices will rise twice the speed of inflation and pay in 2019, again noting the impact of potential trade wars on the American economy. Meanwhile, mortgage costs are accelerating which could hold back home sales this year.
The good news is that inventory levels are loosening slightly as builders’ engines are starting to rev and housing starts inch upward, alleviating pressure on supply levels (although everyone agrees they’ll remain low).
Continued economic success, combined with low inventory levels are the primary indicators in favor of home price increases this year.
Calculated Risk suggests that inventory increases makes it “likely that price appreciation will slow to the low single digits – maybe around 3.0 percent.”
The National Association of Realtors is similarly conservative in projections, forecasting a slight increase in home prices in 2019.
NAR Chief Economist, Dr. Lawrence Yun tells The American Genius, “Home sales have been softened in the latter part of 2018. Not likely to be meaningful gains in home sales in 2019. Combine this with a modest growth in supply of new home construction and existing home inventory implies a much slower home price appreciation in 2019.”
Dr. Yun concluded, “My forecast is only 2 percent to 3 percent in 2019. This would be the first time in seven years where wage growth will likely exceed home price growth.”
So the spread is between 2.0 percent at 7.0 percent growth in home prices – what do you think this year has in store?
Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.
