Housing Market Surprises in 2019
The housing market is always in flux. While a number of organizations can review data and make fairly accurate predictions for what will happen with the housing market, even they are sometimes thrown a curveball. At the start of 2019, the data was pointing to rising home prices, rising interest rates and a continued shortage of homes available for sale. Now, halfway through 2019, the market has had some big surprises in store for everyone.
1. The gap between potential buyers and homes available for sale is getting smaller. The growth of available inventory weakens the strength of the seller’s market. It’s still a seller’s market but a softer one with more new builds and previously owned homes coming on the market. This means more options for potential buyers and slow steps toward balancing out the market.
2. Mortgage rates have dropped. Market forecasts in late 2018 and early 2019 predicted that mortgage interest rates would continue to slowly climb upward throughout this year. Trade issues between the U.S. and China coupled with perceptions that the U.S. economy is beginning to weaken again have caused the Federal Reserve to cut rates instead of increasing rates as was expected.
3. More homeowners are refinancing. The unexpected drop in mortgage interest rates has resulted in an increase in the number of homeowners taking advantage of the still-low rates and refinancing before rates have a chance to climb again.
4. Size of new homes has increased. With the biggest shortage of real estate inventory being in the smaller-sized, more affordable range of homes, home sizes were beginning to trend downward by late 2018. Instead of continuing that trend in early 2019, the average home size for new builds shifted larger in first quarter of 2019.
5. Affordability continues to be an issue. Affordability is particularly a problem for first-time homebuyers on the lower-priced end of the spectrum. The drop in mortgage rates is good news for new homebuyers, however, the steady increase in home prices continues to put many would-be homebuyers just out of reach of home ownership.
This year has held some interesting surprises for the housing market. With mortgage interest rates that have tumbled instead of increased and more inventory available for sale, there is still time to take advantage of the low rates and find your new home.