According to new studies by Zillow, the predicted housing market in 2019 isn’t looking good. In fact, mortgage interest rates are expected to increase, causing ripples throughout the market in increasingly negative ways.
Zillow reports that the average 30-year mortgage, fixed rate mortgage will reach down to 5.8%, lows that haven’t been seen since the recession of 2008.
This will cause homes to become less affordable than ever, thereby discouraging new buyers from purchasing homes while encouraging current homeowners to cling desperately to their low rates.
But that’s not all.
The forecast for renters also looks grim thanks to the rising rates of home values. As more people begin to rent in order to avoid buying a home, the cost of renting will take a sharp upswing to accommodate the increased need.
The ripple continues to spread outward. Daily commutes are expected to worsen as more people begin settling in affordable suburban areas and commute to more profitable cities. It’s estimated that the price of a home in central Boston costs 303% more per square foot than the average home in the suburbs.
It’s also estimated that soon-to-be sellers may have to make some sacrifices because of the changing market. This might include offering an incentive like a cut to the overall price or making costly repairs in otherwise good homes.
Although around 90% of new homes are equipped with ducted HVAC systems, sellers with old homes may end up installing new ductwork to compensate for the falling market.
Other homes may focus on improving their home’s roof or even the quality of water. Throughout the United States, it’s estimated that 85% of homes have water that’s high in magnesium and calcium.
And Zillow isn’t the only housing expert that’s weighed in on the matter. Realtor.com’s chief economist, Danielle Hale, thinks that buyers may have to downsize or eliminate certain houses of their list entirely.
“With less demand in the market, there will be fewer bidding wars and multiple offers. However, with inventory expected to remain limited in most markets, sellers who price competitively can still walk away with a handsome amount of profit, but not the price jumps observed in previous years,” claims Realtor.com’s new report.
On top of that the average price for a home will still grow, but at a rate that’s much slower than previous years. Home prices are expected to grow by a measly 2.2% in 2019 thanks to the market’s downward spiral.
If you’re planning on moving house next year, you might want to wait until the market’s cloudy future gets a little clearer.