Our most frequently asked question: Where is the real estate market headed in 2019??
This question is top of mind not only for our clients who are looking to sell or purchase their home, but banks, equity funds and the global economy. Here are the projections from 100 economist, market analyst and real estate experts (report by Keeping Current Matters 1.19.2019)
What Will Home Prices Do in 2019?
Note: Data provided by Keeping Current Matters annual report dated 1.19.2019
These are national figures, more real to our clients, is what is Nevada expected to see? Nevada is still looking strong for a very solid 2019. A healthy real estate economy will see growth rates in the 3-5% range. What drives our local housing prices is the health of our economy:
The most significant issues facing Nevada’s forward growth is improving our Education, Health Care and maintaining our business-friendly environment. We are seeing significant improvements and growth in Health Care, due to the addition of larger medical research facilities in Nevada.
2018 Housing Market Recap
The December Median House Price was $295,250, that was a year over year increase of 10.2%. From our last full market update in September, Median House Price declined by 1.6%.
The most significant adjustments in the housing market for 4th quarter 2018:
Inventory: The number of units available without offers in December was 6,615, which was a 4th quarter increase of 33.5% from September and December 2018 over December 2017 by 73%.
Days on Market: Increased with 55% of homes selling 30 days or less compared to 70% in September.
As we reported in September, the housing market is stabilizing to a more neutral ground between Buyers and Sellers. Homes that are marketed well and priced within the current market range, are selling within 30 to 45 days. Those homes that were priced assuming a large jump in further appreciation from current sales prices, are not moving.
Interest Rate: According to the most recent Bankers Association, as reported by Bankrate, the average prediction is that mortgage rates will be at 5.1% in 2019, with some experts predicting it higher at 5.5%. Just to remind everyone that even at 5.5% rate is far below what many of the last few decades experienced.
30 Year Fixed Mortgage Rate – Historical Chart
Interest Rate Direct Impact on Buyers: Besides the obvious increase in payment, the more significant issue is purchasing power. For every .5% increase in interest rates, Buyers lose 5% of Purchasing Power. Meaning if their income remains the same, the amount they would now qualify for is 5% less. If we use the average sales price of $295,000 that would mean if rates rise by .5%, then Buyers would be looking at a $280,000 purchase price.
Interest Rate Direct Impact on Sellers: As rates rise, affordability becomes an issue. Let’s look at the ability of Buyers to qualify as a pyramid. As rates rise, the affordability of buyers who can qualify to purchase at market price of a home decreases.
Crown Point’s Takeaway for 2019: STEADY AND STABLE
We expect to sell more homes in 2019 than in 2018, however, we expect appreciation to be in the 3-4% range.
The core foundations for Buyers: When is the right time to purchase?
- I can afford the monthly payment with the down payment funds I have.
- This home will meet my needs & wants for the next 2-3 years.
- With the help of my Crown Point agent, I have found the community/area that best suits my lifestyle, where I want to live, where I work and where I play.
- I am comfortable with an appreciation of 4-5% over the next few years.
- I want to own my own home. I want the pride of home ownership.
- I see homeownership as a critical part of my future retirement savings, such as owning a home free and clear when I retire.
The core foundation for Sellers: To sell their home at the right time and at right price
- What is the timeframe I need to sell by?