With the winter holiday season behind us, many home buyers are gearing back up again. And a lot of them have the same question: Will 2019 be a good year to buy a home in the United States?
While real estate conditions can vary from one market to the next, 2019 could actually be a great year to buy a home. Below, we’ve outlined five specific reasons to support this notion.
5 Reasons Why it Could Be a Good Year to Buy
In 2019, home buyers across much of the U.S. will have more properties to choose from, thanks to inventory growth over the past year. We’re also staring the year with historically low mortgage rates. And in many cities, real estate conditions are currently shifting away from a seller’s market and toward “neutral” territory.
All of these trends bode well for home buyers in 2019. So let’s take a closer look at them.
1. There is more inventory available in many real estate markets.
Home buyers who make a purchase in 2019 could have more properties to choose from, compared to those who purchased in 2017 or 2018.
Housing inventory (i.e., the number of homes listed for sale at a given time) has risen over the past year or so. It’s another reason why 2019 could be a good year to buy a home in the U.S.
Nationwide, real estate inventory was up by about 5% in December 2018, compared to a year earlier. In the nation’s largest real estate markets, inventory rose by 10% during that same period.
This trend seems to be most pronounced in those areas that have suffered from extremely low inventory levels. Cities like Seattle and San Jose are now seeing the biggest increase in the number of for-sale listings. That’s good news for home buyers in those markets, and others like them.
A January 2019 report from realtor.com® showed that the number of active listings in San Jose, California rose by a whopping 158% in December 2018 (compared to a year earlier). Seattle’s inventory of active listings jumped 96% during that same period. Those are extreme examples. But the same trend is occurring, to some degree, in housing markets across the country.
2. Mortgage rates declined at the end of 2018.
Mortgage rates rose during the first half of 2018, followed by a decline toward the end of the year. During the first week of January 2019, the average rate for a 30-year fixed mortgage loan was 4.51%. That’s based on the weekly industry survey conducted by Freddie Mac.
Rates dropped steadily during the last two months of 2018. In November, the average rate for a 30-year fixed home loan was 4.94%. That average dropped by 43 basis points (0.43%) over the next few weeks, which brings us up to where we are today.
Home buyers who purchase during the first part of 2019 could take advantage of these historically low rates. But rates could go up as we move further into the year. Analysts from both Freddie Mac and the Mortgage Bankers Association recently predicted that 30-year loan rates would average 5.1% during 2019.
3. Price reductions are more common among sellers.
A few years ago, a person selling a home in a hot real estate market would have buyers lining up with offers above the asking price. But those days appear to be behind us — at least for most housing markets across the country. In fact, 2019 could be the “year of the price reduction” in many real estate markets.
According to the January realtor.com® report mentioned earlier:
“Nationally, the percentage of listings that saw price reductions increased to 15 percent in December, up from 13 percent a year ago. The increase is being driven by the nation’s largest markets. In fact, 38 of the 45 top markets saw an increase in the share of price reductions.”
4. Home buyers have more negotiating leverage these days.
Many real estate markets across the country are undergoing a shift right now. Homes are sitting on the market longer, and sellers appear to be more motivated to attract buyers. There’s a general sense that the real estate market is cooling, and there’s plenty of data to support that.
As a result, home buyers in 2019 could have more negotiating leverage than those who purchased over the past few years.
5. The unemployment rate is down.
A strong job market gives home buyers the financial means needed to make a purchase, and to keep up with their monthly mortgage payments. It also instills a sense of confidence. And there is good news on this front as well.
The nation’s jobless rate has dropped steadily over the past ten years or so. As of November 2019, the U.S. unemployment rate was down to 3.7%. That’s the lowest it has been in years. (Let’s not forget that unemployment shot up to 10% in 2009, following the Great Recession.) In November 2018 alone, the U.S. economy added 155,000 jobs.
So there you have them, five reasons why 2019 could be a good year to buy a home in the U.S.