Key Trends Home Buyers and Sellers Should Watch in 2019

We're entering the home stretch of 2018, when you can actually say, "See you next year!" to someone you'll see in just a few weeks. It's a time to look ahead, to make new plans, to achieve new dreams.
And if those dreams include buying your own home, you should keep an eye on the ever-changing tides of the housing market. Now, markets are like the weather: You can't entirely predict how they will act, but you can get a sense of the forces that will push things in one direction or another.
The realtor.com® economic research team analyzed a wealth of housing data to come up with a forecast of what 2019 might hold for home buyers and sellers—and it looks like both groups are going to be facing some challenges.

1. We'll have more homes for sale, especially luxury ones

We've been chronicling the super-tight inventory of homes for sale for several years now. Yes, homes have been hitting the market, but not enough to keep up with the demand. Nationwide, inventory actually hit its lowest level in recorded history last winter, but this year it finally started to recover. We're expecting to see that inventory growth continue into next year, but not at a blockbuster rate—less than 7%.
While this is welcome news for buyers who've been sidelined, sellers must confront a new reality.

“More inventory for sellers means it’s not going to be as easy as it has been in past years—it means they will have to think about the competition," says Danielle Hale, realtor.com's chief economist.

"It’s still going to be a very good market for sellers," she adds, "but if they’ve had their expectations set by listening to stories of how quickly their neighbor’s home sold in 2017 or in 2018, they may have to adjust their expectations."

Although next year's inventory growth is expected to be modest nationwide, pricier markets will tell a different story. In these markets—which typically have strong economies (read: high-paying jobs)—most of the expected inventory growth will come from listings of luxury homes.

2. Affording a home will remain tough

It's no secret that home sellers have been sitting pretty for the past several years. But is the tide about to change in buyers' favor?

“In some ways, life is going to be easier for home buyers; they’ll have more options," Hale says. "But life is also going to be more difficult for home buyers, because we expect mortgage rates to continue to increase, we expect home prices to continue to increase, so the pinch that they’re feeling from affordability is going to continue to be a pain point moving into 2019.”

Hale predicts that mortgage rates, now hovering around 5%, will reach around 5.5% by the end of 2019. That means the monthly mortgage payment on a typical home listing will be about 8% higher next year, she notes. Meanwhile, incomes are only growing about 3% on average. That double whammy is toughest on first-time home buyers, who tend to borrow the most heavily and who don't have any equity in a current home to draw on.

 

3. Millennials will still dominate home buying

Just a few years ago, millennials were the new kids on the block, just barely old enough to buy their own homes. Now they're the biggest generational group of home buyers, accounting for 45% of mortgages (compared with 17% for baby boomers and 37% for Gen Xers). Some of them are even moving on up from their starter homes.

As we mentioned above, things will be tough for those first-time buyers. But the slightly older move-up buyers will reap the benefits of both their home equity and the increased choices in the market.
And regardless of whether they're part of that younger set starting a career or the older set that's starting a family, "they’re going to be more price-conscious than any other generation," says Ali Wolf, director of economic research at Meyers Research.

That's because they typically are still carrying student debt and want to be able to spend on experiences, like travel. That takes away from the funds they can put aside for a down payment, or a monthly mortgage payment.

"They want to maintain a certain lifestyle, but they still see the value in owning a home," Wolf says.
So they might compromise on distance from an urban center, or certain amenities, or space—70% of millennial homeowners own a residence that's less than 2,000 square feet, Wolf notes.

There's plenty of time to expand those portfolios, though, as millennials' housing reign is just beginning: This group is likely to make up the largest share of home buyers for the next decade. The year 2020 is projected to be the peak for millennial home buying—the bulk of them will be age 30.

 

4. The new tax law is still a wild card

At the time of last year's forecast, the GOP's proposed revision of the tax code was still being batted around Congress. While there was talk that it might discourage people from buying a home, no one really knew how it might affect the real-estate market.

This year ... well, we still don't really know. That's because most taxpayers won't be filing taxes under the new law until April 2019. And while some people might have a savvy tax adviser giving them a better idea of what's in store, for many, the reality check will come in the form of a bigger tax bill—or a bigger refund.

Renters are likely to have lower tax bills, but might not be tempted to buy while affordability remains a challenge, and with the new, increased standard deduction reducing the appeal of the homeowner's mortgage-interest deduction.

"I think the new tax plan will affect mostly homeowners and home buyers in the upper parts of the distribution," says Andrew Hanson, associate professor of economics at Marquette University in Milwaukee, WI. "Those who either own or are buying higher-priced homes are going to pay a lot more."

Sellers of those pricier homes will also take a hit, as buyers anticipating bigger tax bills won't be as willing to pony up for a high list price.

The biggest change resulting from the new tax law, Hanson predicts, will be in mortgages, since people will be less inclined to take out large mortgages.

"If anyone is going to be upset about the tax plan, it'll be mortgage bankers," he says.

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The Ultimate Guide to Moving: Should You Hire Movers or DIY?

Depending on where you're moving, how many items you're moving and a slew of other factors, you need to decide whether to hire a moving company or tackle the job yourself. Before making your final decision, read through these pros and cons, plus a bonus option for the less-traditional move.

Moving yourself pros

• More cost-effective: A DIY move can save you money on paying movers an hourly or flat rate. Depending on the company you go with, hiring movers can cost thousands of dollars! 
• No scheduling conflicts: Rather than being beholden to the moving company's schedule, moving yourself gives you much more freedom. 
• Ensure precious items are protected: If you move on your own, you can be sure that anything valuable or precious remains safe under your care.
• Save money for furnishing your new digs: Many people move themselves because they would rather save money for furnishing their new place or start an in-case-of-emergency fund for home repairs. 

Cons

• Time-consuming: If you don't have a lot of time on your hands, you should consider hiring movers. 
• Stressful: Moving yourself requires a lot of physical and mental strength. That's why people turn to professional movers. 
• Moving truck fees, gas and tolls: Make sure that a DIY move is actually more cost-effective than hiring movers. Factor in the cost of a moving truck, gas and tolls before making a decision.

Hiring movers pros

• No heavy lifting: If you hire a moving company, you can rest assured that you will not pull a muscle or break anything while trying to maneuver heavy furniture out of your current home and into a new one.
• Insurance to protect valuables: If anything gets damaged during the move, moving companies come with insurance that will cover the cost of anything that doesn't make it out alive. 
• Huge time-saver: If you're short on time, a moving company can swoop in to save the day. It can even offer packing and unpacking services to make your life simpler! 
• Very efficient: Moving companies offer professional services, meaning that the men and women you hire can get your items in and out in a timely fashion. If you decide to go it alone, that might not be the case. 

Cons

• Extremely expensive depending on the packages: Before you get too excited about someone else packing and unpacking your home for you, be aware that adding on this service will increase your bill astronomically. 
• Insurance doesn't mean your items won't get damaged: If your goal is to not have anything broken, then the insurance a moving company offers won't be worth it to you. No amount of money can replace a family heirloom or other priceless item. 
• Less control over scheduling: If you hire movers, know that they may not be available on the date you need. 

Consider a portable storage unit
If neither of these options impresses you, try looking into portable storage units. Typically, the storage company will bring the container to your home so that you can pack it with your belongings and then bring the container back to its storage facility.
Some people go this route if they are in the process of selling a home and want to move some of their belongings out of the home to stage it for buyers. Or if you're doing a home renovation, a portable storage unit is a good option.
What does it boil down to? 
Take note of all the pros and cons mentioned above before you decide on movers or a DIY move. Your unique situation will impact the best option for you. Make sure you do the numbers and that you're getting the right deal for your situation.
Feel free to contact us at any time for questions on how to make your next move as seamless as possible.

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