Housing outlook for 2019 appears dark, but comes with silver linings
Affordability will take a hit and rent prices are expected to go higher next year behind rising mortgage rates, but they'll bring positive developments, according to Zillow.
Mortgage rates are forecast to see multiple hikes in 2019, with average 30-year fixed rates climbing to 5.8% — a height not reached since 2008's housing crisis. In turn, the already-low housing affordability will continue to fall and rents will go up with the influx of potential buyers shirking from growing interest rates.
"Certain headwinds — including rising mortgage interest rates, higher rents and stiff competition for housing in the most desirable areas — will only grow stronger over the next year, but that won't necessarily be a bad thing," Aaron Terrazas, Zillow's senior economist, said in a press release.
However, these climbing prices and mortgage rates actually helped the housing inventory, giving consumers more options during home shopping.
"A slower-moving market is likely to give more buyers a chance to catch their breath and choose from a wider selection of homes that fit their preferences and budgets. We as a nation are increasingly struggling to reconcile the places where we live or want to live with the places where we work, and infrastructure investment has failed to keep up," Terrazas continued.
In the next year, secondary housing markets should continue to gain steam, as more people search for better affordability.
"Going forward, job growth will begin to move beyond the handful of pricey, coastal superstar cities that have driven so much growth to date, and into more affordable communities with room to grow that are eager for the opportunity to shine."
While the main themes of the housing market are predicted to stay in line with the recent past, the narrative is fit for change.
"2019 looks to be a pivotal year as the market cools and transitions from one marked by robust recovery into one more in line with historic norms and more balanced between buyers, sellers and renters," Terrazas said.