What Has Driven the 2018 Housing Market?
Low inventory levels in 2018 drove up prices as housing supply fell short of buyer demand. Many buyers competing for the same homes, causing some to win and some to lose. In the last couple months, however, things have begun to shift as housing inventory has picked up, prices are leveling off some, and buyers are finding more to choose from. So, what can we expect for 2019?
Higher Mortgage Rates For One
Demand is beginning to be affected as mortgage rates have slowly increased. Buyers are pushing back on home prices by about five percent in many areas, and we are seeing somewhat steady inventory growth.
First-time home buyers are working with smaller budgets because of these interest rate increases, and sellers are now in a situation where they may end up paying a higher interest rate after they sell and buy another home. While mortgage rates are still historically low, these increases are likely to impact buyer and seller decisions.
Good News for 2019
There is always good news, however. Economic factors are still strong and should continue to promote housing for buyers, sellers and investors going forward into 2019. Unemployment levels are very low, incomes are steadily rising, and the economy continues to grow. Even with some volatility in the stock market, this will probably not affect the majority of consumers.
As the market shifts, we will see slower price growth but only about a two percent decline in sales levels, continuing at a healthy pace as long as the economy remains strong.
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