Rising rates and home prices will overshadow inventory increases and less competition from buyers to deliver a one-two punch to affordability making it more difficult to buy or sell a home in 2019.

Buying a home will be an even more expensive undertaking in 2019 as mortgage rates and home prices increase. Buyers who are able to stay in the market will find less competition as more buyers are priced out, but feel an increased sense of urgency to close before it gets even more expensive. Although the number of homes for sale is increasing, which is an improvement for buyers, the majority of new inventory is focused in the mid-to-higher-end price tier, not entry-level.

Although it remains a seller’s market, sellers will need to be mindful of their increasing competition and shouldn’t necessarily expect to name their price and get it in full — a change from the past few years. With less demand in the market, there will be fewer bidding wars and multiple offers.

Other Key Housing Trends of 2019:

  • Modest inventory gains continue; high-end inventory growth spreads. National inventory increases will remain low in 2019. In the majority of markets, the number of homes being put on the market or newly constructed has increased slightly, while the pace of sales has slowed slightly, which has helped stop the inventory decline.
  • Soft home sales continue. After the best sales year in a decade in 2017, home sales are on track for a mild decline in 2018, which is likely to extend into 2019 with a 2.2 percent decline.
  • Millennials purchase the most homes. Millennials will continue to make up the largest segment of buyers next year, accounting for 45 percent of mortgages, compared to 17 percent of Boomers, and 37 percent of Gen Xers. are of homebuyers for the next decade as their housing needs adjust over time.
  • Tax plan remains a wild card for housing: In April 2019, taxpayers will go through the income tax process for the first time since the new tax plan. For most renters, the results will be good: lower rates and a higher standard deduction should amount to lower tax bills. For homeowners, it’s a mixed bag. Some will benefit from lower rates and a higher standard deduction, but many others will find limited itemized deductions and personal exemptions mean a higher tax bill. 

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