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2019 Real Estate Market Predictions

2019 Real Estate Market Predictions

There is a significant and noticeable shift in interest rates and home prices as we roll into our 2019 real estate market predictions.

Many of us who have been in the industry for 15 or more years believe that we’re finally back to a normal market, and swings are to be expected.  I believe we’re in of those swings now.

  • Will Interest Rates Rise?
  • Are Home Prices Falling?
  • How Home Buyers Win
  • How Home Sellers Win
  • Working with Professionals

Will Interest Rates Rise?

Interest rates have been steadily rising since early 2017. We’ve seen interest rates drop a bit in the last 30 days, but that was on the heels of 90 days of rates rising almost .75%.

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The last 30 days have given .375% to .50% back, which still leaves us with interest rates “only” .25% in the past 90 days.

This recent MarketWatch article lists representatives from major, reputable lending related institutions that predict rates will go up anywhere between .375% and .75% in the 2019 real estate market.

Excerpt from MarketWatch Article

2019 Interest Rate PredictionsMortgage rates in 2018 may be the closest thing to “normal” we’ve seen in a long time.

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With two more weeks in the year as of this publication, we’re likely to see a full-year average of 4.54% for the 30-year fixed-rate mortgage.

That will be the highest since 2010.

Does this that interest rates will continue to rise through 2019?  I don’t know.  If I had to pick a side, I would pick the side that says there is room for rates to go higher before they start coming down.

Are Home Prices Falling?

Yes, and no.  That’s not an easy question to answer without pointing out the specific, and literal answer to the question of “home prices” falling.

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This is different from home values.  I do not expect that home values will drop next year, although you may see a more modest increase in year over year equity.

Home prices falling means that a couple of things are coming to a head at the same time.

In very simple terms, it’s a combination of rising interest rates and affordability pressure winning an arm wrestling contest with seller expectations.

As a consequence of rising rates, buyers are making below asking price offers to maintain an affordable payment.  Falling home prices is one manifestation of affordability pressure.

Price reductions are becoming more and more common, and I believe we will continue to see prices drop in the 2019 real estate market.  What you’re seeing here is a “shift” from a sellers market, towards a neutral, or even a buyer’s market in some cases.

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Home values may slow in appreciation while the 2019 real estate market goes through this shift, but it is unlikely that values will drop. That’s on person’s opinion, don’t assume that I’m right!

Also, do not automatically assume that a reduced sale price is the best option for the buyer or the seller.

How Home Buyers Win

Expect more home options in 2019.  We are already seeing days on market rise.  Expect more homes for sale, for longer periods of time.  In the image below, you can see that days on market are at 28 days now, up from the 2018 low of 14 days on market.

Southern California MLS Days on Market Trend 2018

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While it’s true that home prices, or “listing price” is being reduced, this presents a smart negotiating tactic that will make your offer stand out by creating a win / win situation for both you and the seller.

This strategy is call a Seller Paid Discount Points strategy.  How it works, is that you, as the buyer, offer what your agent is confident that the home will appraise for (this is important).

If a listing price has been recently reduced, and the home is worth the original listing price, clever home buyers can ask the seller to permanently buy down your interest rate.

You win as the buyer by getting a below market interest rate, paid for by the seller.  The seller wins because you’re offering a higher sales price in exchange for paying discount points towards your below market rate.

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When both parties walk away feeling like they got a great deal, you know your offer is going to stand out, and get accepted above any lower offer being made.

Recommended Reading: How Buyers Win Using an Interest Rate Time Machine

How Home Sellers Win

Home sellers that find themselves facing a price reduction, should seriously consider using the above strategy to attract full price offers.

“Seller to pay discount points for full offer” can be placed in private remarks for buyer’s agents that are doing research for their clients.

You can also chose “seller to pay discount points” if your MLS offers this option.

2019 Real Estate Market Predictions

I will go ahead and go out on a limb here and offer my prediction, or more accurately perhaps, my opinion.

I do expect that rates will come down, but maybe not in 2019.  I also do not expect that rates will sky rocket above what any of the previous institutions are predicting.

I think that 2018’s shift toward a buyer’s market is likely to continue.  As buyers continue to face affordability challenges, I think you’re going to see seller paid discount points become a key negotiating tactic.

Homeowners would be smart to look at any debt consolidation options now, before rates continue to go up much higher.

Working with Professionals

I can not emphasize enough the importance of hiring a professional, experienced Realtor and loan officer when selling or buying your home.

When you call a lender from a TV or radio commercial, or click an ad you saw on the internet that has a catchy headline, you are playing competence roulette.

I personally have been in the business for almost 20 years now, and started this website 10 years ago to educate and empower consumers.

We have had over a million consumers visit this website and I have answered many thousands of questions from folks all over the Country.

I hear horror stories like this on a pretty regular basis.  Quicken is not alone in running the type of business model that puts profit before people, they are just the biggest, and therefore the biggest offender.

If you are trying to buy or refinance your home in California, I can help.  You may ask questions about your options below, or shoot me an email directly to scott@buywisemortgage.com.

If you are outside of California, I can introduce you to a loan officer from our Expert Network that I personally know and trust.

About the Author

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

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