To paraphrase popular song lyrics, what a long, strange year it’s been. The end of 2018 saw a slight decrease in mortgage rates following multiple hikes and faltering growth of home prices after seeing them sky-high at the beginning of the year. While it is impossible to know for sure what the new year will bring, the following are predictions based on analysis of the current trends.
Buying Market To Be Dominated by Millennials
In 2019, the largest sub-segment of millennials will be staring age 30 in the face. Therefore, peak millennial home buying is projected to occur in 2019 and 2020 as this cohort looks to settle down. Those who currently own homes and are looking to move up will have more mid- to upper-tier price point options. This age group is also expected to contribute to the increase in first-time buyer demand although millennials buying for the first time may face a struggle in 2019.
Market To Favor Sellers Slightly
Various real estate listing sites, including Mashvisor and Zillow, demonstrate that houses are staying on the market for a relatively high number of days, 97 on average according to one such site. Similarly, a relatively high number of listings have demonstrated a decrease from the original listing price, approximately 17 percent according to one platform. Both of these conditions are unusual for a seller’s market. However, housing inventory is low and likely to decrease, giving sellers in the market a slight edge.
Mortgage Rates To Remain High
One reason why sellers aren’t seeing a greater advantage in the market is that rising interest rates have discouraged buyers from getting into the market. Potential buyers are concerned about biting off more than they can chew; that is, committing to a mortgage with a higher interest rate and then finding themselves unable to pay it down the road. Though mortgage rates saw a slight dip at the end of 2018, rates across the country continue to hover right around 5 percent. While it is unclear if rates will continue to rise in 2019, they seem unlikely to fall.
Home Prices To Demonstrate Slow Growth
Following approximately 5 percent annual growth for the past several years, home prices in Philadelphia showed appreciation at zero percent during the second and third quarters of 2018. While this may be a temporary condition and prices may pick up as 2019 progresses, whatever growth does occur is expected to progress at a slower pace than seen in the past. However, this doesn’t apply to new construction, where demand outpaces current housing starts.
Predicting market trends in Philly always involves a certain amount of guessing, but working with an experienced real estate agent can help you achieve the result you desire. Whether buying or selling, contact us at Mr. Philly Real Estate today.