First-time home buyers will face a challenging year in their home search this 2019. This year, it is predicted that home prices as well as mortgage rates will continue to rise amidst the declining number of available homes for sale. In other words, finding a home needs to be conducted aggressively if one prioritizes affordability when reaching a decision.
Here are the best trends in real estate to watch for in 2019.
1. There will be a rising demand for homes amidst the inadequate supply.
Despite the forecast that homes for sale will rise in number, it is not enough to meet the increasing demand. More homes are needed to keep up with the growing population as shown by an estimate in 2017 when the number of homes that were built were fewer by 370,000. If this is not resolved, millions of home buyers will continue to face certain challenges such as rising housing prices that are not within one’s income, constricted formation in the household, and prevention of homeownership to those who are in the market for buying a home.
2. Mortgage rates will continue to rise.
The rise in mortgage rates is predicted to continue in 2019 although this can occur at a slower pace. Freddie Mac, a mortgage capital provider which is being sponsored by the government, forecasted that a 30-year fixed mortgage rate will increase by as much as half a percentage point this year. In the meantime, the National Association of Realtors predicted a 0.4 percentage point increase while Fannie Mae gave a 0.1 percentage point increase in their forecast.
These predictions cover the period between the end of this year and the end of next year. Expect to see an increase and decrease in mortgage rates for several times between the said period.
3. Home sizes are getting smaller.
Home builders are focusing more on building smaller houses to create a more affordable housing market to prospective buyers. More first-time buyers clamor for starter homes as opposed to purchasing forever homes.
Prior to 2018, the median size of new homes is measured at 2,440 square feet, as revealed by the U.S. Census Bureau. In the latest data, the median size of single-family homes is now at 2,320 square feet which is 4.9 percent smaller than the previous record.
4. Home affordability continues to be a top priority among buyers.
In areas where homes for sale have a lower inventory, home affordability tends to be an enticing yet evasive feature. This is due to the fact that the demand for homes in these places is higher compared to the number of available homes which causes the prices to increase at the fastest rate.
On the other hand, mortgage rates that experience a gradual increase will not be a huge issue to buyers. The said increase, which can range from a quarter to a half percentage point, will be insignificant, thus making the home buyer unperturbed with his home buying decision.
5. First-time buyers continue to enjoy high attention from the market.
From 2007 to 2015, around 3 million first-time buyers are said to have delayed their decision to buy a house. However, this has changed as their housing needs catch up along with an increased priority placed on raising a family. For the past 3 years, home sales have grown with 80 percent of the growth being attributed to first-time buyers. The latter felt that owning a house is better than staying in a rental apartment.
It should also be noted that 60 percent of mortgage sales are from first-time home owners. Prior to the housing crisis, the sales percentage was recorded at a lower rate of 40.
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