Frankie Woo Investments, LLC

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2019 Housing Market Outlook

It’s the beginning of the New Year. Here’s what to expect for 2019 in the Housing Market.

Housing Market Expectations in 2019

  1. There will be moderate inventory gains. The inventory growth is projected at less than 7%. The higher priced markets are expected to see even higher inventory gains.

  2. There will be a shift from luxury construction to entry-level construction. Builders will focus on bringing smaller, more affordable homes to the market to support millennial first-time home-buyers.

  3. There will be a slowdown in appreciation. Median home prices are expected to rise by 2% - 3%, which should ease affordability issues with prospective buyers.

  4. Mortgage rates will continue to raise. Rates are expected to top 5.5%.

  5. There will be an increase in home purchase originations. There will be roughly $1.24 trillion originations, a 4.2% annual increase. Refinances, on the other had, are expected to drop by 12.4%.

Housing Trends at a glance

  1. The Fed founded out the year with yet another rate hike. Rates have increased from 0% in September 2016 to 2.25% today. 2018 saw rate hikes in all four quarters. The Fed also revised its rate hike forecast to just two hikes in 2019 versus four. Even with these increases, rates are still near all-time lows, but are slowly ticking up. Now may be the time to buy!

  2. Existing-Home Sales increased in November to 5.32 million, which is a 1.9% jump month-over-month (MoM). That equates to two straight months of growth.’

  3. Medium existing home prices increased 4% Year-over-Year (YoY) to $257,700. Housing inventory is at 3.7 months. A 6-month supply is considered “normal” historically

  4. Housing Starts jumped 3.2% in November. In August, Mortgage Delinquency Rate fell to the lowest level in 18 years.

That’s all for this update. Come back for another update in the 2nd quarter.

Sources:

[1] Realtor.com® 2019 National Housing Forecast.

[2] National Association of Home Builders®.

[3] National Association of Realtors® (NAR), November 2018.

[4] Zillow® Research, November 2018.

[5] Mortgage Bankers Association®, October 2018.

[6] Federal Reserve, Federal Open Market Committee (FOMC).

[7] NAR, Existing-Home Sales, November 2018.

[8] U.S. Census Bureau, Monthly New Residential Construction, November 2018.

[9] CoreLogic®, a data and analytics company, Loan Performance Insights, October 2018.

Frankie Woods