If you are in the market to buy a home in 2019, home prices will continue to rise. It’s not going to be a bidding war like we saw in 2018, but smaller 4-5% gains, especially in the spring. With today’s homeowners in great equity positions and fixed rate mortgages, there is no real catalyst to cause a bubble burst.
As a result, more home buyers may migrate out of state where its’ more affordable. Southern CA renters may head east to Arizona or Texas to buy a home, which could give smaller cities a bigger percentage gain as homebuyers flock there. If you are in the market to purchase an investment property as an additional source of income, it may be a good time to buy as many renters cannot afford to buy in metro areas and rents will continue to increase.
Millennials should account for the lion’s share of home purchases in 2019. The demand will be great for the market, but ultimately not for them. For one, inventory will still be a problem in the starter home category and home prices are high overall. While they may not get the best price on their first home, they will get a decent mortgage rate.
Mortgage rates will probably increase somewhat in 2019, but it‘s doubtful it will be anything like the carnage we observed in 2018. We have already seen pullbacks in late 2018 due to the ongoing trade war and concerns of an impending recession, which will force the Fed to put the brakes on future rate hikes. Traders may also head for bonds versus equity, which would push down yields and eventually lower rates a bit.
In conclusion, don’t expect home prices to crash in Metro areas like Southern California, they will steadily continue to rise, and the time to buy is now. If you are in the market to buy, mortgage rates are still at historical lows. Mortgage underwriting is still loosening and there are many options with bank statement loans, lower down payments and loans for foreign nationals.
Author : Tanaz MOSHIR, Mortgage Loan Consultant