2019 Real Estate Market ? | Growth, Crash, Plateau!

Is 2019 the year of the Real Estate Crash?  Predictions for the upcoming year through research, analysis and even crystal balls permeate all facets of our lives…. For me I look closely at what the gurus predict for the real estate market…

Of course, the predictions didn’t take into consideration the government shutdown that is interfering with our lives!

There are the positive gurus, the negative ones and myself predicting for our local market….let’s take a look at the positive predictions.

The majority…. Forbes, Kiplinger, Realtor.com, Trulia, Zillow, Redfin,  have a positive outlook on the real estate market for 2019, though they believe it will be slow and steady in price and volume of sales.  Their main factors that contribute to this outlook or prediction are the interest rates, low inventory and the millennials buying.

The interest rate increases in the last 2 years may have affected affordability for some people along with the higher home prices yet it has not stopped the demand for home ownership.  According to Kiplinger, if the Federal Reserve only have the two interest rate hikes in 2019 instead of the 3 previously planned, that will contribute to the continue growth of the real estate market…. Wall Street believes that there will only be one rate hike this year.

The slight increase in the housing inventory will put pressure on prices, thereby allowing home prices to still increase in 2019, yet not at an alarming rate because of the higher interest rate. 

Realtor.com does anticipate it remaining a sellers’ market, one that will look and behave differently though. Sellers believing they can get their top price and sell very quickly will be surprised when those offers don’t come pouring in. Days on Market will likely increase. If sellers want to move their homes quickly, they need to make sure it’s priced to sell so it won’t languish on the market!

The saving grace is also that the millennials are entering the market now due to their increased income and starting families and will contribute to the health of the real estate market according to Forbes and Urban Land Institute.

Therefore, the positives for a slow but steady real estate market are interest rates aren’t excessive, the millennials are buying, and though low inventory has caused higher prices in the past that won’t be the case this year… yet there are gurus who are predicting the real estate crash of 2019!

Curbed, a real estate blog and Gord Collins, an analyst predicts that there will be a crash of some type this year due to high interest rates, high home prices and affordability. 

Forbes has predicted a 5.5% interest rate by the end of 2019…. Therefore, if the interest rates continue to rise and home prices do not drop, people will not be able to purchase a home… and the sellers are not going to be moving on to buy another home from someone else…. The market stops!

As for higher home prices, Forbes may predict a 2.2% increase but Curbed predicts prices will drop in the west coast early 2019….and the last real estate recession started in California!

Affordability, as I mentioned, is when interest rates and homes prices are too high for those people with a median household income to purchase a home.  

Over the past several years, home price growth has largely outpaced income growth, making for an increasingly unaffordable home-buying environment,” Trulia noted in its report on the real estate market.

The majority are positive that there will not be a real estate crash in 2019 and a few nay-sayers are all for that crash! What do I think?

Always deep in the trenches of real estate, I get a feel for where the market is and where it may be heading for my area…In 2006, I saw the changes occurring in the markets in the San Diego area long before it hit the media and long before it hit the rest of the nation.

The national gurus give us an overall look at the market; however, real estate is location, location, location!  Even in our area, some neighborhoods or types of properties will not be affected by any of these issues and others will be…. As the economy cools, many people will decide that a second home on the beach is not necessary, yet the Navy captain being transferred will be buying that home for his family!

One thing that also motivates buyers and sellers is fear…. I do not see that yet in this market to a large extent; however there are a few comments being tossed around about interest rates and prices and questions asked if it’s a good time to buy.  The answer always… is it depends on your real estate goal.

I believe 2019 is a transition year…. We are coming off of a hot seller’s market into a more balanced market, that may continue for many years or may jump to a buyer’s market which will remain to be seen as the year progresses.

Predictions are just that…. A forecast of what may be.  For some the real estate market will continue to grow, for a few it will crash, and for me I see a plateau!

Growth, Crash, or Plateau for 2019….  That is the Real Estate Question!

Dee Marie Fisher

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