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Housing Market Predictions: Moving Forward in 2019


Forbes MagazineTwilight in the courtyard of a beautiful Tuscan-style villa recently asked 6 industry experts to share their housing market predictions for the remainder of 2019. According to the article, despite earlier suggestions that a buyer’s market is on the horizon, sellers are still in the driver’s seat. While that’s good news for homeowners here in Montecito, 2019 has also been a promising one for would-be home buyers.

“First-time buyers can expect less competition than last year, but it’s still very much a seller’s market in most places,” says Ralph McLaughlin, deputy chief economist for property data firm CoreLogic.

That includes right here in Montecito. This is good news for Millennials whose dream of owning a home seemed to be out of reach. They are the beneficiaries of the current slowdown in the seemingly unending rise in home prices. They also benefit from the dips and unexpected lows of mortgage rates.

As McLaughin points out, the year “seems to be shaping up as a good time for potential first-time buyers to enter the market, with no current signs of imbalance that would either force them to hurry or cause them to pull back.”

What he means is that this is a good time to search for your dream home, whether you are new to real estate or are just considering making a move. Whatever the reason, this is the time to move in a thoughtful and deliberate manner.

Here’s what McLaughlin and other industry experts predict for the second half of 2019 and beyond:

  1. Millennials will continue to drive the real estate market.

Experts consider 2019 the year of the first-time homebuyer. That’s due to the fact that more than half of all mortgages originated by Fannie Mae and Freddie Mac went to first-time buyers last year. Now that Millennials are reaching their prime home-buying years, those numbers are expected to continue to grow.

The National Association of Realtors (NAR) reports Millennials accounted for the largest share of mortgages in the country: making up 37% of all homebuyers last year.  In fact, in November of 2018, Millennials finally overtook Generation X as having the largest share of loans by dollar volume. Last year, Millennials accounted for 45% of all new mortgages. Gen Xers’ mortgage activity has been steadily declining since accounting for more than half of all loan originations by dollar volume in 2013. 

“This trend shows no signs of reversing in 2019,” observes Odeta Kushi, deputy chief economist for title insurance and settlement company First American. In other words, Millennials will continue to rule the market moving forward.

  1. Minor improvement expected in inventory.

Data from Trulia shows that inventory is rising for starter homes and trade-up properties. In fact, the real estate marketplace’s recent analysis shows starter home inventory up by 3.5% last quarter, while trade-up options rose 4.8%. The drawback for buyers? These upticks came with 12.4% and 8.3% hikes in price, respectively, which is good news for homeowners.

As Lending Tree’s chief economist Tendayi Kapfidze explains, “There has been an increase in supply compared to last year, but levels are still quite low. Supply is particularly lacking at lower price points.”

Kushi goes on to explain that the current total housing stock number is well below the nation’s pre-recession average. While an upward trend in starter home inventory may help, higher-priced markets like Montecito will benefit the most.

  1. Home prices to continue an upward trend

Home prices have been trending up since 2012, surpassing their pre-recession peaks early last year. This trend has lost steam recently, but it has not reversed as some experts thought. For instance, just last March prices jumped 7% over 2017. This year, prices rose just 3.7% annually. That slowdown in price appreciation is helping would-be buyers afford the home of their dreams. Experts warn that house prices aren’t done rising yet, something homeowners are happy about.

“Across the nation, home buyers are benefiting from lower-than-anticipated mortgage rates, rising wages and a relative slowdown in house price appreciation,” First American’s Kushi said. “Despite the affordability boost, rising demand against limited inventory of homes for sale means acceleration in house price appreciation may be on the horizon.”

This theory is supported by the most recent Home Price Index Predictions from CoreLogic which predicts that by May of 2020, we’ll see a 5.6% rise in home prices.

  1. Mortgage rates will remain constant or go lower.

Mortgage rates hit their lowest point since late 2016 last month. According to Freddie Mac, those rates average 3.80% today. The decline in mortgage rates has resulted in a rush of refinancing last month. In fact, July’s refis accounted for more than half of all mortgage activity in a single week. Experts say this trend is expected to stick around, or even go lower.

Just ask Doug Duncan, chief economist at Fannie Mae, “The Fed has moved to a bias toward easing, as global economic activity has slowed. Interest rates have fallen as a result and could move lower if the Fed acts to lower rates as insurance for economic growth.”

Fannie Mae, Freddie Mac and the Mortgage Bankers Association all predict in their housing market predictions the 30-year, the fixed-rate mortgage rate will finish out between 3.9% and 4.1% by year’s end. That number is lower than 2018’s full-year average of 4.54%.

  1. Buyers will have time.

Competition is not believed to be as competitive as it has been in recent years, that despite an influx of younger first-time buyers. According to Duncan, buyers simply aren’t in a rush today and they don’t need to be. 

“We expect the overall inventory of available homes to remain stable this year, but buyers shouldn’t feel as though they need to get a deal done quickly to avoid missing out on an opportunity.”

In fact, the number of consumers who think now is a good time to buy a home is up 13 points over last month according to Fannie Mae’s recent Home Purchase Sentiment Index. Duncan goes on to explain, “Potential buyers are in no hurry, because house price appreciation has moderated, and the Fed is giving them no reason to think that mortgage rates should be expected to increase significantly.” 

  1. Some communities, like Montecito, still better bets than others.

Experts agree that today’s real estate market is neither pro-buyer nor pro-seller. And they add that prospective buyers and sellers should not expect an extreme dip or a major spike in prices or rates in the near future. 

“As the surge of Millennial demand begins to hit shore in 2019,” Kushi says, “Millennial first-time homebuyers may want to consider cities that offer a greater supply of affordable homes.”

Now that you know the housing market predictions for the remainder of the year, are you ready to make a move? If you’re looking to move to, or within Santa Barbara’s upscale communities, call Cristal Clarke at 805.886.9378 or email her at She’ll happily add your listing to her portfolio of fine homes, like the one pictured above titled A Touch of Tuscany in Montecito.


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