Homebuying Trends Making an Impact in 2019

Looking to buy a home in 2019? Navigating the market can be daunting, especially for first-time homebuyers. To empower yourself during the homebuying process, we’ve put together the key trends we’re seeing for national real estate in 2019. 

Home Prices Are Steadily on the Rise

Home sales are continuing to rise at a steady pace to keep up with inflation. According to a report from the National Association of Realtors (NAR), the median home price for existing homes is expected to rise to $266,800 in 2019, which is up 3.1% since 2018. Also, according to the Federal Open Market Committee, PCE (personal consumption expenditures) inflation will reach an average of 1.8% in 2019.

This supports the NAR’s assertion that “the U.S. is experiencing historically normal levels of affordability.” However, the NAR also reports that homebuyers may not see it the same way. “Potential buyers may be staying out of the market because of perceived problems with affordability.” This disconnect suggests that while buyers may have financially recovered from the recession, the emotional toll of the financial turmoil has left them wary of the market.

However, those worried about an impending bubble can breathe a sigh of relief. Larence Yun, the chief economist for the National Association of Realtors, says we’re living in a strong, stable market. One indication is the historically low foreclosure rates, signaling that people are able to afford the homes they purchase. 

Mortgage Rates Are Leveling Out

It seemed like mortgage rates were on the rise for 2019, but they’ve dipped since peaking in November. The rising rates—which seemed to have slowed the number of homes sales—have dropped off. We’ve seen a dip of more than half a percent for the 30-year mortgage, bringing more good news for buyers as we move into the peak homebuying season.

That said, many analysts see mortgage rising on the whole and anticipate them to reach a high of 5% on a 30-year fixed mortgage. That’s a half percent higher than the 4.5% we’re currently seeing. So, the good news about mortgage rates may be short-lived. With this one, you’ll have to watch closely. If you have the means and you find your perfect home, you may want to move while interest rates are still low.

Millennials Are Buying the Most Homes

It seems that millennials have overcome the financial burden of their avocado toast. In 2018, millennials accounted for the biggest percentage of home purchases out of any generation for the fifth year in a row. According to another NAR report, older millennials made up 26% of recent homebuyers. Younger millennials made up an additional 11% of homebuyers—passing up the silent generation for the first time.

Given that millennials accounted for a combined 37% of homebuyers in 2018, it makes sense that sellers are taking notice of what millennials value when searching for a home. Most millennials who purchased homes were first-time homebuyers. Younger millennials reported valuing their commute and the convenience in relation to their job when making their homebuying decision. An overwhelming 81% of older millennial homebuyers found their home with a mobile app. 

Smaller Cities Are Becoming More Appealing

The rising prices in primary cities (think: New York, Los Angeles, San Francisco) are causing buyers to look elsewhere for a home. Buyers are increasingly looking to put down roots in a city that affords them a higher quality of life.

Business is driving this migration, too. We’re seeing major companies relocate and open new offices in a way that will affect the home market. Apple is opening a billion-dollar campus in Austin. Amazon is opening a second headquarters outside Washington, D.C., and Toyota relocated to the Dallas area from southern California

What This Means for Buyers

Housing prices are rising steadily—at a rate only slightly higher than that of inflation. Inventory remains somewhat stagnant and mortgage rates may be on the rise. On the whole, the market is affordable and stable. So, while it may feel like it’s a bad time to buy, those feelings are not reflected in the market (but again, you’re not the only one who feels that way).

What This Means for Sellers

As millennials continue to gain dominance as the biggest percentage of homebuyers, sellers will have to prioritize their concerns for homebuying. Convenience continues to be key—whether it be proximity, neighborhood attractions, or just the ease of the homebuying process.

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