2019 Residential Real Estate Trends
Residential real estate trends can often be indicators of the health of the overall economy. The housing market experienced a bit of a lull in 2018, as many homeowners opted not to sell, translating to limited inventory available on the market.
Interest rates, inventory and the homes that are sitting on the market longest: John Horton, Senior Residential Lending Manager at Associated Bank, shares some of the trends he foresees playing out in 2019.
After a number of years without an increase to interest rates as the economy recovered from the 2008-09 recession, the Federal Reserve began raising rates in earnest throughout 2017 and 2018. Consumers tend to view higher interest rates more favorably when it comes to their deposit products, which accrue that interest. On the flip side, higher rates can sometimes deter them from making large purchases, such as homes, as paying out that interest is now involved.
Horton stresses that homebuyers should not fear the oft-maligned interest rate, noting it might not have as significant of an impact on a mortgage as some might think.
“Where it does have a major affect though is on car loans, on home equities, on credit cards,” Horton said. “People hear rates, they automatically run to mortgages.” However, those mortgages might still be worth pursuing, according to Horton.
“It’s not all doom and gloom.”
Inventory will continue to be on the low side.
Throughout 2018, low inventory of houses up for sale was often seen as creating a great market for sellers but provided few options for buyers.
“I think for a while there when houses weren’t moving … some of the sellers got really greedy,” Horton said. “(They) started passing up on some offers, thinking ‘I’ll get another one,’ (but) you might not get another one.”
Inventory will likely continue to remain low in 2019. Horton advises that if selling, be sure to price your home appropriately.
“When you work with your realtor, price it right,” Horton said. “Some people do price it high. That really discourages a lot of people from looking. They’ll know it’s priced high, and then if you make an offer (viewed as being too low), the sellers are (potentially) offended.”
What is for sale? Luxury homes.
One of the home types sitting on the market longer than their owners would probably like is those of a higher price, homes at around $1 million.
“It’s just a price point that’s tougher to move,” Horton said. “Anything over $1 million is tougher to move, so you’re seeing a lot of those staying on the market for a longer period of time.