Golden Gate Bridge

Forecast: California Real Estate Market Could Outperform the Nation into 2020

A recently revised forecast suggests that the California real estate market could outperform the nation through 2019 and into 2020 — at least in terms of annual home-price appreciation.

Positive Home-Price Forecast for California

This new housing market prediction came from the research team at Zillow. In February 2019, the group wrote: “California home values have gone up 4.0% over the past year and Zillow predicts they will rise 7.3% within the next year.” Their 12-month outlook for the country as a whole was 6.6%.

Two things are noteworthy about this particular forecast:

  1. The housing analysts at Zillow expect home prices in California to rise more in 2019 than they did in 2018.
  2. They also expect house values in the state to outpace the nation as a whole, between now and early 2020.

Of course, California is a huge state. And real estate conditions can vary quite a bit from one market to another. But in most cities across the state, home prices are expected to continue climbing through the rest of 2019 and into 2020.

The chart below, created by Zillow, shows their proprietary home value index for the state of California going back nearly a decade. It also shows the group’s price forecast for the California real estate market through early 2020 (green shaded area).

Chart: California home price trends. Source: Zillow.com

As you can see from the above chart, home prices in California have been following an upward trajectory since 2012. That trend is expected to continue through 2019 and into 2020 as well.

Inventory Shortages Still a Factor in CA Housing Markets

These positive predictions are largely the result of a supply and demand imbalance (an ongoing condition we’ve written about in the past).

In many real estate markets across California — and across the nation as a whole — there just aren’t enough homes on the market to satisfy demand. This puts upward pressure on home prices and increases competition among buyers.

As of January 2019, most of the major cities across California had less than a three-month supply of homes for sale. According to economists, a “balanced” market has closer to five or six months of supply. This is partly why we are seeing positive housing market forecasts for many California cities, stretching into 2020. There are plenty of buyers out there, but not enough homes to go around.

Among California’s major cities, supply is particularly low in Oakland. That city had about a 1.5-month supply of homes for sale in early 2019. Note the decimal there. That’s an exceptionally low level of inventory. It’s also why homes in Oakland are selling faster than in many other cities.

San Francisco’s real estate market is also experiencing a severe inventory shortage at the moment. But when is that not the case?

California Home Buyers Still Enjoying Low Mortgage Rates

Something strange is happening in the mortgage world. This time last year, many economists were predicting a gradual rise in mortgage rates throughout 2018 and into 2019. But we are now seeing the exact opposite.

In mid-February 2019, the research team from Freddie Mac wrote:

“The combination of cooling inflation and slower global economic growth led mortgage rates to drift down to the lowest levels in a year.”

At that time, the average rate for a 30-year fixed mortgage loan was 4.37%. Three months ago, 30-year mortgages held an average rate of 4.94%. So they’ve come down quite a bit since then.

Chart: Average 30-year mortgage rates. Source: Freddie Mac.

The chart above shows the average rate for a 30-year fixed mortgage going back to February / March of 2018. The right side of this chart shows the steady decline that has occurred over the past few months.

As we’ve seen, recent forecasts for the California real estate market suggest that home prices will keep rising for the foreseeable future. And low mortgage rates are part of the reason why. These historically low rates help entice buyers into the market, boosting demand for housing.

And when you add in the constrained inventory conditions mentioned earlier, you have all the ingredients for continued price growth.

Population Loss Could Affect Future Real Estate Trends

California’s population has grown considerably over the past ten years. But it’s now starting to “shrink” due to outmigration. The short version is that the number of people leaving the state (for other states across the country) exceeds the number that is coming in.

According to a 2018 report from the California Legislative Analyst’s Office:

“For many years, more people have been leaving California for other states than have been moving here. According to data from the American Community Survey, from 2007 to 2016, about 5 million people moved to California from other states, while about 6 million left California. On net, the state lost 1 million residents to domestic migration—about 2.5 percent of its total population.”

Of those Californians who have left the state, the number-one destination has been Texas. Home prices are considerably lower in Texas, and that state also boasts a strong economy and job market. This appeals to many who have been “priced out” of the California real estate market.

If home prices across California continue to rise (as recent housing market forecasts suggest), these outmigration patterns will likely continue. Over time, this could weaken demand in many real estate markets across the state and lead to smaller home-price gains.

Disclaimer: This article contains home price and housing market predictions for California extending through 2019 and into 2020. Those forecasts were provided by third parties not associated with the Home Buying Institute. They are the equivalent of an educated guess and could prove innacurate over time.

Sold house sign

San Antonio Housing Market Sees Big Jump in Offers Above List Price

Recent forecasts suggest that home prices within the San Antonio, Texas real estate market could rise more slowly in 2019 than last year. But don’t let that fool you. It’s still a very competitive market due to population growth, constrained inventory, and other factors.

In fact, a recent report by Zillow showed that the percentage of purchase offers that were above the listing price increased during the second half of 2018. That trend indicates a housing market with strong demand from buyers.

It also sends a clear message to those who are planning to buy a home in San Antonio in 2019: be ready for some competition.

Buyers Are Making Strong Offers in San Antonio

Earlier this month, the real estate information company Zillow published a report showing a nationwide decline in the number of home-buying offers that were above the list price.

To quote that report:

“As of December, 19.4 percent of homes were sold above their list price, the lowest share of above-list sales in almost three years. December marked the seventh straight month in which this rate dropped…”

But a few housing markets across the country bucked the trend by experiencing an increase in the number of offers above the list price. San Antonio, Texas was one of them.

Within the San Antonio real estate market, about 44% of homes sold during the second half of 2018 received offers from buyers that were above the listing price. That was the highest percentage among the nation’s major metropolitan areas.

According to Zillow’s research team: “San Antonio is demonstrating strong demand [for housing] commensurate to its rapidly growing population…”

Related: Dallas one of the “hottest” markets

Population Growth a Major Factor

As mentioned above, population growth has a lot to do with the current housing market in San Antonio, Texas. Strong demand from buyers has caused an increase in the number of offers above list price. That’s largely because there are more buyers in the market today, but not enough inventory to go around.

According to the U.S. Census Bureau, the population of San Antonio grew by nearly 14% from 2010 to 2017. That’s more than double the national rate of growth during that same period (5.5%).

The city’s population has risen above 1.5 million people. The population for the broader San Antonio-New Braunfels metropolitan area is fast approaching the 2.5-million mark.

Population growth has increased demand for housing, on both the rental and purchase side. This in turn has put upward pressure on home prices and increased demand within the local real estate market.

Housing inventory, meanwhile, remains tight in the area. According to Grant Lopez, the 2019 chairman of the San Antonio Board of REALTORS®:

“While inventory has remained tight, hovering between 3.2 and 3.6 months, it has not discouraged buyers from getting into the market.”

A balanced market has closer to five or six months worth of supply. So the San Antonio real estate scene is still a bit tight. Inventory in the area does appear to be on the rise though, and that could produce a cooling trend down the road.

According to the local Board of REALTORS, the median (or midpoint) sale price for the area rose to $225,600 at the end of 2018. The average sale price was around $260,000 at that time.

Strong Local Economy Gives Housing Market a Boost

San Antonio’s housing market is also getting a boost from having a strong local economy.

At the end of 2018, the unemployment rate for the metro area was down to around 3.2%. That’s a big improvement, when you consider that it peaked above 7% in the wake of the Great Recession.

Not only does this lure new residents to the area (as shown in the population figures from earlier) — it also gives local residents the confidence and financial means needed to purchase a home. And both of those things tend to increase housing demand.

Geosphere at Epcot

Orlando, Florida Housing Market Expected to Perform Well in 2019

According to a forecast published last month, the Orlando, Florida real estate market could be one of the hottest in the nation during 2019. This is largely the result of limited housing supply and steady demand from buyers.

‘Hot’ Forecast for Orlando Housing Market in 2019

In January, the real estate information company Zillow published a forecast that ranked what they feel will be the hottest housing markets of 2019. Specifically, the group looked at the 50 largest metropolitan areas across the United States. They ranked them based on a number of supply and demand indicators and other economic factors.

According to that forecast, the Orlando, Florida real estate market is expected to be one of the hottest in the country this year. It came in at #9 among the 50 largest metros.

The chart below (generated by Zillow) shows their home value index for Orlando, dating back to 2014. As you can see, prices have followed an upward trajectory in recent years.

Chart: Orlando median home prices. Source: Zillow.

The median home value in Orlando was around $238,000 at the end of January 2019. Prices rose by nearly 10% over the past year or so, according to at least one source.

Related: Prices keep climbing in Miami

Supply and Demand Imbalance

Orlando’s real estate market is generating positive forecasts for 2019. And that’s not surprising when you look at the current supply-and-demand situation in and around the city.

The short version is there are many buyers in the market actively seeking a home, but not enough properties available to meet that demand.

At the end of 2018, the Orlando housing market had about a 2.6-month supply of homes for sale. That is well below the 5 to 6 months that economists consider to be a balanced real estate market. This supply shortage is putting upward pressure on home values, and is partly why prices in Orlando are outpacing the national average.

Population growth is another factor contributing to the positive forecast for the Orlando real estate market in 2019. According to data collected by the U.S. Census Bureau, the population of Orlando rose by more than 17% from 2010 to 2017. By comparison, the U.S. population as a whole rose by around 5% during that same period.

Steady population growth increases demand for housing on both the rental and purchase side. When you combine this with the limited inventory mentioned earlier, you have all of the ingredients for ongoing home price appreciation. And that’s exactly what we are seeing right now.

A Booming Job Market Enables Buyers

Orlando also benefits from having a strong job market. As of December 2018, the metro area’s unemployment rate was around 3%. That’s a big improvement when you consider it peaked above 11% in 2009, toward the end of the Great Recession.

The Zillow housing market report also mentioned the strong job market in Orlando:

“A booming job market, Orlando has the fifth-most job openings per person of all major markets, even though the metro’s population has grown faster than all but one large market (Austin, Texas).”

Low Mortgage Rates: Another Good Reason to Buy a Home

Home buyers in Orlando and elsewhere across the nation have another good reason to “seize the day.” Mortgage rates dropped again this week, sinking to their lowest level since April 2018. That’s according to the weekly survey conducted by Freddie Mac.

As of this week, the average rate for a 30-year fixed mortgage loan was 4.41%, with an average of 0.4 fees / points paid at closing.

On February 7, 2019, the research team at Freddie Mac wrote:

“The U.S. economy remains on solid ground, inflation is contained and the threat of higher short-term rates is fading from view, which has allowed mortgage rates to drift down to their lowest level in 10 months. This is great news for consumers who will be looking for homes during the upcoming spring homebuying season.”

Low mortgage rates. Continued home-price appreciation. A strong local economy. These are just some of the reasons why 2019 could be a good year to buy a home in the Orlando area.

Disclaimer: This article includes forecasts for the Orlando, Florida real estate market through 2019 and into 2020. Those predictions were offered by third parties not associated with the Home Buying Institute. Economic and real estate forecasts are the equivalent of an educated guess and should be treated as such.

Ocean Drive in Miami

Miami, Florida Housing Market Outlook 2019: Prices Keep Climbing

A new round of forecasts for the Miami, Florida real estate market suggest that home prices in the area will continue rising at a modest pace through 2019 and 2020.

That’s for the mainland city. The Miami Beach housing market, on the other hand, has cooled considerably as buyers pull back.

Note: This article has been divided into two parts to account for the significant differences between the mainland Miami real estate market and the Miami Beach housing scene.

Home Prices Expected to Keep Climbing

Home prices in the city of Miami have risen steadily over the past year or so. According to Zillow, the median home value in this real estate market was around $337,000, as of January 2019. That was an increase of around 5% from a year earlier.

The broader Miami-Fort Lauderdale-West Palm Beach metropolitan area experienced a gain of around 8% during that same 12-month period.

Looking forward, the company’s research team predicted that the median home value in Miami would rise by around 4.4% over the next year (through January 2020).

The chart below, courtesy of Zillow, shows how the median home price in Miami has changed over the past ten years or so. You can see where prices dipped following the Great Recession, and how they began a steady upward climb in 2012 — a rise that is still occurring. The green shaded area shows Zillow’s forecast for the Miami housing market through 2019 and into 2020.

Chart: Miami home price trends. Source: Zillow.

On the inventory side, there’s good news for buyers who are planning to purchase a home in Miami in 2019. There’s actually plenty of inventory across the metro area right now, when compared to a lot of other major U.S. cities.

As of December 2018, Miami had about a 7-month supply of homes for sale. (That’s a theoretical measurement used to track real estate inventory levels over time.) A lot of other metro areas across the country have somewhere around a 3- to 4-month supply of homes for sale right now, and that’s below what is considered to be a “balanced” real estate market.

So from a home-buying standpoint, Miami is actually better off than many other housing markets across the country. This reduces competition among buyers, while improving the chance that they can find a suitable property.

On the demand side, population growth in Miami is bringing more buyers (and renters) into the local real estate market. According to the U.S. Census Bureau, the city’s population grew by 16% from 2010 to 2017. This and other factors have led to mostly positive forecasts for the Miami real estate market in 2019.

Miami Beach Is a Very Different Story

Across the bridge in Miami Beach, it’s a very different scene. Due to a glut of housing inventory and a pullback of buyer demand, the Miami Beach real estate market could see a lower level of home-price appreciation in 2019.

There has reportedly been a significant drop in buyer demand in this condo-heavy real estate market. A lot of the condo buyers in Miami Beach are from Latin American countries, where economic and political troubles are roiling.

According to a January 2019 article in Financial Times:

“The problem is that hard times at home have seen overseas buyers lose their appetite for Miami homes. Brazil’s economy has run out of steam — with its currency losing 40 per cent of its value against the dollar in the past five years — and that of Venezuela has virtually collapsed, savaged by hyperinflation.”

That’s partly why there are so many properties on the market in Miami Beach — and why a lot of them are just sitting there.

In December of 2019, condos and other properties listed for sale in Miami Beach spent a median of more than 100 days on the market before going under contract. That was well above the national median of 50 days for that same month, and it indicates a sluggish real estate market.

Disclaimer: This article contains forecasts and projections for the Miami, Florida housing market through 2019 and into 2020. Those predictions were provided by third parties not associated with the Home Buying Institute. We have gathered them here as an educational service to our readers.

The famous Vegas sign

Las Vegas Housing Outlook: Big Home-Price Gains in 2019 and 2020?

Welcome to the Home Buying Institute’s Las Vegas Housing Market Outlook for 2019 to 2020. This report was created to give home buyers, investors, and real estate agents some idea of what to expect in 2019, in terms of local housing trends. (See disclaimers below.)

Las Vegas Housing Market ‘Poised to Rule’ in 2019

In January, realtor.com® included Las Vegas in its list of “10 Surprising Housing Markets Poised to Rule in 2019.” To come up with their list (which also included Phoenix, Miami and Boston), the group’s research team looked at the number of sales of existing homes and their prices, along with the amount of new home construction in the 100 largest metro areas in the country.

They analyzed “the local economies of each area, along with population trends, unemployment rates, median household incomes, and other factors.”

Based on their analysis, the group stated that Las Vegas is one of several real estate markets where both the number of home sales and prices are expected to jump in 2019, bucking the national slowdown trend.

A couple of points about this ranking:

We also forecast that the Las Vegas real estate market will outperform the nation as a whole in 2019, in terms of home-price appreciation. But there’s an important trend that was left out of this particular study. The Las Vegas housing market is indeed cooling down. There’s more inventory available today, and that will likely lead to smaller home-price gains in 2019 than what we saw in 2018.

With that being said, Las Vegas is still a strong and active real estate market. And it will likely remain that way for the foreseeable future. We expect home prices in this market to rise more than the national average in 2019. Given the current supply-and-demand situation in the area, it would not be surprising to see the median home value in Las Vegas climb somewhere between 6% and 8% during 2019.

Home Prices Past, Present and (Possible) Future

Home prices in Las Vegas rose steadily over the last few years, outpacing the national average. (Of course, prices in this market declined harder and faster than the nation as a whole during the last housing crash, and that certainly plays a role in the rapid rise we are seeing today.) The difference is that the current run-up in prices is a bit more sustainable, being driven more by supply and demand instead of rampant speculation.

As of January 2019, the median home value in Las Vegas was around $277,000.

Home prices in Las Vegas have more than doubled from the low-water market set in 2012, but they still haven’t reached the peak set during the previous housing boom. That’s not necessarily a bad thing, either. The price peak reached back in the 2000s was the result of an unsustainable bubble. So we should hope things are different this time around.

During 2018, the median home value in Las Vegas rose by around 14% according to Zillow. That was nearly double the national rate of appreciation during that same 12-month period.

The chart below shows the median home value in Las Vegas over the past ten years, according to Zillow. As you can see, prices have risen steadily over the past few years. You can also see Zillow’s positive forecast for the Las Vegas housing market through 2019 (shown in the green shaded area).

Chart: Las Vegas home prices over 10 years. Source: Zillow.

A cooling trend might actually be beneficial for Las Vegas. Back in May of 2018, Fitch Ratings ranked Las Vegas as being the most overvalued real estate market in the country. (Fitch is one of the “big three” ratings agencies, along with S&P and Moody’s.)

Forbes covered this story back in May. As Samantha Sharf wrote:

“Home prices in Las Vegas have overshot economic fundamentals, says Fitch Ratings Managing Director Grant Bailey. There are bright spots in the local economy—the population is increasing swiftly, and the price to rent a place to live isn’t increasing nearly as fast as to buy one. Those highlights, however, are not enough to support 11% growth in the Case Shiller Home Price Index for the city or to save the gamblers’ paradise from the top spot on the latest Fitch ranking … of the most overvalued housing markets in America.”

At the end of 2018, the property analytics company CoreLogic also reported that the Las Vegas real estate market was overvalued, based on its analysis. So a slowdown in price growth might be a good thing at this point.

Housing Inventory on the Rise

There’s good news for home buyers who are planning to enter the Las Vegas housing market in 2019. Real estate inventory (i.e., the number of homes listed for sale) has increased over the past few months.

This means that buyers who make a purchase in 2019 could have more properties to choose from — and maybe a bit less competition as well. Some forecasts suggest that housing inventory in Las Vegas could continue to grow throughout the year.

Inventory in Las Vegas “bottomed out” at around 1.9 months in July. It then rebounded to around 3.7 months at the end of 2018.

According to economists, a 5- or 6-month supply of homes is considered to be a “balanced” real estate market. So back in the summer of 2018, Las Vegas was looking like a seller’s market in terms of inventory. But it’s beginning to shift more toward “neutral” territory.

The growth in for-sale inventory became apparent at the end of 2018. According to the Greater Las Vegas Association of REALTORS®, about 10,000 single-family homes were on the market at the end of November 2018. About 7,000 of them hadn’t had a single offer yet. That marked a 54% increase in inventory from a year earlier.

The bottom line to all of this is that there were more homes listed for sale at the start of 2019 than there were during 2017 and (most of) 2018.

Population Growth Increases Demand for Homes

You can’t talk about Las Vegas housing market forecasts and trends without looking at the population. It’s an important factor on the demand side of the equation. And the population in Las Vegas can be summed up with two words: gradual growth.

The state of Nevada’s population rose above 3 million last year. In December, The U.S. Census Bureau reported that Nevada’s population increased by almost 62,000 people (or about 2.1 percent) between July 2017 and July 2018.

In Las Vegas itself, the population was around 631,676 in 2018. That was about 10% higher than in 2010. So there has been steady growth in Las Vegas, as well as in the state of Nevada as a whole.

This kind of trend increases demand for housing, on both the rental and purchase side. It also helps to sustain home prices over time.

A Stronger Job Market

Employment is another important consideration for home buyers. This is true for investors as well as “regular” buyers who plan to occupy the homes they purchase. In short, a strong local job market gives buyers the financial means to purchase a home, and to keep up with their mortgage payments.

And there’s good news here as well. While Las Vegas’s unemployment rate is still higher than the national average (as of January 2019), it has improved steadily since the post-recession years.

The chart below is based on data provided by the U.S. Bureau of Labor Statistics. The gray shaded area that starts around 2008 indicates the country’s recession. As you can see, the unemployment rate in the Las Vegas-Henderson-Paradise metro area skyrocketed from 2009 to 2010. But starting in 2011, it began to steadily decline as the local economy gained jobs.

Unemployment rate in Las Vegas-Henderson-Paradise, Nevada

Disclaimers: This article contains housing market forecasts and predictions for the Las Vegas real estate market through 2019 and into 2020. Such predictions are the equivalent of an educated guess and should not be considered financial advice.

Dallas skyline

Dallas, Texas Housing Market Forecast: One of the ‘Hottest’ in 2019?

Recent forecasts for the real estate market in Dallas, Texas suggest that home prices in the area could rise faster than the national average in 2019. A separate forecast from Zillow ranked Dallas as one of the top ten “hottest” housing markets of 2019.

Bold Outlook for Dallas Housing Market in 2019

At the start of 2019, the median home value for Dallas, Texas was around $201,000. (The median for the broader DFW metro area was a bit higher.) That was a gain of more than 13% from a year earlier, according to data collected by Zillow.

Predictions from housing analysts point to continued home-price growth throughout 2019. In fact, the Dallas real estate market is expected to outperform the nation this year, in terms of annual home-value appreciation.

Given the current rate of appreciation, it would not be surprising to see the median house price in Dallas rise somewhere between 7% and 10% over the next year.

Zillow’s research team recently predicted that the median value in Dallas would climb by 11.2% over the next 12 months. That was a much bolder forecast than the one they issued for the nation as a whole, which predicted 6.4% growth.

Related: 8 more markets heating up

Housing Supply on the Rise

Inventory is another important trend that could shape the Dallas-area housing market in 2019. This year, home buyers across the metro area could have more properties to choose from.

At the end of 2018, the Dallas real estate market had more than a 4-month supply of homes for sale. That was a higher level of inventory than most metro areas across the U.S., and also higher than the national average during that same timeframe.

The key takeaway here is that housing inventory in Dallas (i.e., the number of homes listed for sale) increased during the latter part of 2018. As a result, buyers who enter the market this year should have more options when it comes to choosing a property.

Dallas Makes Zillow’s “Hottest” List

In January, Zillow published a forecast that included what they felt would be the ten “hottest U.S. housing markets for 2019.” Dallas was ranked at number seven on that list.

To create their “hot list,” Zillow examined a number of factors for the nation’s 50 largest metro areas. They then combined these variables to create a “hotness” score. They looked for metro areas with strong income growth, growing populations, and low unemployment — among other factors.

San Jose, California was ranked number one in the hottest markets forecast. Orlando and Denver rounded out the top three. Dallas came in at number seven.

A Cooling Trend Could Prevent Affordability Issues

The Dallas real estate market is something of a paradox right now, as we move into 2019. Home prices in the area continue to rise faster than the national average. At the same, however, there is clearly a cooling trend taking place.

Paige Shipp, regional director at MetroStudy, recently told The Dallas Morning News:

“Dallas-Fort Worth, the nation’s top new home market, is slowing from a frenzied, overheated pace to a more stable, normalized market. Builders and developers are hard at work delivering product to meet the strong demand for affordable new homes.”

Dallas currently leads the nation in terms of new-home construction, according to MetroStudy and other sources. There were nearly 35,000 housing starts in the DFW area during the third quarter of 2018, more than any other metro. (A “housing start” is the beginning of construction for a house.)

If inventory continues to grow in this market — as expected — it will likely lead to smaller home-price gains in the future. And that’s probably a good thing. When house prices rise at a much faster pace than local wages and income, it can create affordability problems. So a cooling trend could actually be beneficial at this point.

Disclaimer: This article includes housing market predictions for the Dallas-Forth Worth metro area in 2019. They were provided by third parties not associated with the Home Buying Institute. Real estate forecasts are the equivalent of an educated and are far from certain.

Phoenix, Arizona

Phoenix Housing Forecast for 2019: A More Modest Year Ahead?

Recent forecasts for the Phoenix, Arizona real estate market suggest that home prices could continue rising through 2019. The local housing market does appear to be cooling a bit, though, with smaller price gains expected this year. The city recently made a top-ten list of best markets for buyers.

Phoenix Housing Market Forecasts for 2019

The median home value in Phoenix was up to around $240,000 as of January 2019. That was an increase of 8.7% compared to a year earlier, according to Zillow. Their research team is projecting smaller gains in 2019. In January, the group predicted that the median home value for Phoenix would rise by 2.4% over the next 12 months.

Also in January, Realtor.com predicted that home prices in Phoenix would climb by 5.6% during 2019, a bolder forecast than Zillow’s. The industry group also included Phoenix on their list of top ten markets for home buyers (due to job growth, new construction, and other factors).

Given the current supply and demand situation within the Phoenix real estate market, it would not be surprising to see home prices rise somewhere between 3% and 5% during 2019. So let’s explore some of those supply and demand factors that are currently influencing this housing market.

Chart: Phoenix Home Price Trends

The chart below, provided by Zillow, shows the median home value in Phoenix, Arizona over the past ten years or so. The sharp drop you see from 2009 through 2012 occurred in the wake of the last housing collapse. Arizona was hit particularly hard by that crisis, and Phoenix was its epicenter.

You’ll also notice a steady upward trend in the years that followed, along with a forecast for additional price growth through 2019.

Phoenix home prices. Source: Zillow.

Housing Supply Has Increased

Back in the spring of 2018, the Phoenix housing market was down to about a 2-month supply of homes for sale.

That’s a theoretical metric used to track supply levels over time. In this case, it means that it would’ve taken two months to sell all homes listed for sale if no new ones came onto the market in the meantime. According to economists, a “balanced” real estate market has about a 5- to 6-month supply of homes for sale.

Inventory conditions have improved over the last few months. Toward the end of last year, for example, the Phoenix real estate market had about a 3.5-month supply of homes.

This means that home buyers who enter the market in 2019 could have more properties to choose from, compared to those who purchased homes last year or the year before.

Phoenix is one of many real estate markets across the country where supply is still falling short of demand. But this appears to be changing, as new properties come onto the market.

In 2019, growing inventory could be an important factor for the Phoenix real estate market. If inventory levels continue to rise, it would create a better balance between supply and demand. This in turn could lead to smaller home-price gains than those we saw in the past.

Population Growth Brings Buyers Into the Area

The Phoenix area’s population has grown steadily since 2010, and this increases housing demand on both the rental and purchase side.

The city of Phoenix had a population of around 1.6 million in 2017, when it was last measured. That was up from 1.4 million in 2010. The broader metro area now has a population of around 4.7 million people, making it the 11th largest metropolitan area in the country (by population).

One reason for this population growth is Phoenix’s steadily improving job market. According to the Bureau of Labor Statistics, the unemployment rate for the Phoenix-Mesa-Scottsdale metropolitan area was down to 3.9% at the end of 2018. That’s a huge improvement, when you consider that it peaked above 10% in 2009, following the recession.

Phoenix has long been a hotspot for retirees. Today, its job market and stable economy are also attracting younger residents from elsewhere in the country. This increases demand for housing and puts upward pressure on home prices.

These and other factors have led to mostly favorable forecasts for the Phoenix housing market in 2019. The general consensus among economists and analysts is that prices in the area will continue to rise over the coming year, but probably at a slower pace than last year. Sales activity could cool this year as well, especially if the inventory situation continues to improve.

Is Now a Good Time to Buy In Phoenix?

Is 2019 a good time to buy a home in Phoenix? This is a hard question to answer across the board, because there are so many personal factors involved. But from a market standpoint, 2019 could be a great time to buy in the Phoenix area.

Here are some of the reasons why:

  • Mortgage rates are still hovering at historical lows. As of mid-January 2019, the average rate for a 30 year fixed mortgage was 4.45%. That’s a great opportunity for home buyers. But rates are expected to rise later this year.
  • More inventory has come onto the market over the past year, giving buyers more properties to choose from. This is good news for those who plan to enter the market sometime during 2019.
  • Loan limits have have been increased for the entire Phoenix metro area. Federal housing officials increased the limits for conventional, VA and FHA loans. This means borrowers have a higher level of financing to work with, without having to cross into “jumbo” mortgage territory.
  • The U.S. economy is stable with record low unemployment levels. Similarly, the job market in Phoenix has improved over the years. This gives buyers both the income and the confidence they need to make a purchase.

Disclaimer: This article contains housing market forecasts and predictions for the Phoenix, Arizona area. Such forecasts are the equivalent of an educated guess and should not be viewed as financial advice or guidance.

Shutdown sign

Report: Government Shutdown Delaying Some FHA and VA Loans

Shutdown sign
A shutdown notification outside the National Archives building.

Apparently, the partial government shutdown is affecting some home buyers who use FHA and VA loans to purchase a home. Recent reports showed that some borrowers with FHA and VA loans have experienced delays and other “snags” as a result of the government shutdown. Here’s what you need to know about it.

‘Non-Essential’ Government Workers on Furlough

The ongoing government shutdown that is dominating the news cycle right now started on December 22, when Congress failed to pass a funding resolution. It is referred to as a “partial” shutdown, because most of the government was already funded and is therefore unaffected by the current impasse.

Many government agencies are now down to just “essential personnel.” Many workers who are considered to be “non-essential” have been put on furlough, while others are being forced to work without pay.

(Side note: If you’re concerned for the president’s financial wellbeing during these hard times — don’t be. Article II of the Constitution says that the president’s compensation “shall neither be increased nor diminished during the period for which he shall have been elected.” So he’ll get by. As for all of those other federal workers who are now falling behind on their bills, they’re less fortunate.)

Government Shutdown Affecting Some VA & FHA Loans

Which brings us back to FHA loans. These mortgage loans are generated in the private sector, the same as “regular” mortgage products. But they receive insurance backing from the federal government. The loans are originated and funded by mortgage lenders, and backed by the government. (At least, when the government is functioning.)

Similarly, VA loans used by military members and veterans receive a government guarantee through the U.S. Department of Veterans Affairs.

The FHA loan program is managed by the Department of Housing and Urban Development (HUD), and HUD is essentially closed right now. A visit to the department’s website on January 9 revealed the following message on a bright red background:

“Due to the lapse in Congressional Appropriations for Fiscal Year 2019, the U.S. Department of Housing and Urban Development (HUD) is closed. HUD websites will not be updated until further notice.”

The U.S. Department of Veterans Affairs website inspires a bit more confidence. As of January 9, their home page stated the following:

“The Department of Veterans Affairs is fully funded for fiscal year 2019, and in the event of a government shutdown, all VA operations will continue unimpeded.”

So, is the government shutdown affecting people who are trying to use an FHA or VA loan to buy a house? Apparently so. The National Association of REALTORS® recently surveyed its members on this issue, 11% of whom reported an impact on current clients. Another 13% reported a delay due to IRS income verification (which is typically required for mortgage loan processing), while some experienced closing delays for FHA and VA loans.

To quote the survey report:

“Among those impacted by the shutdown, 17 percent had a delay because of a USDA loan, 13 percent had a delay due to IRS income verification, nine percent had a delay due to FHA loans, six percent had a delay due to a VA loan.”

A related report from CBS News explained:

“If you’re getting a Federal Housing Administration or Department of Veterans Affairs loan, it’s likely you can expect delays in the underwriting process, and it’s possible your closing date will be pushed back as well.”

Related: Average closing time for mortgages

It’s important to remember that the government does not actually provide funds to home buyers. Mortgage lenders do that. The FHA merely insures the loans, while the VA partially guarantees them. But their involvement is still needed to complete the process, and that’s where some borrowers are reporting delays and snags.

Hopefully, the current shutdown will be resolved in the near future. In the meantime, home buyers who plan to use an FHA loan (or some other government-backed mortgage program) will have to be flexible.

Neighborhood

Lakeland, Florida: The Hottest Housing Market in 2019?

According to a January 2019 report from realtor.com®, Lakeland, Florida could have the hottest housing market in the U.S. during 2019. That prediction was part of a report entitled: “The 10 Surprising Housing Markets Poised to Rule in 2019.”

Rounding out the top five on that list were:

  • Grand Rapids, Michigan
  • El Paso, Texas
  • Chattanooga, Tennessee
  • Phoenix, Arizona

Many real estate markets across the country have cooled down over the past year or so, with fewer sales and slower home-price growth. Properties are staying on the market longer, as demand weakens.

But that’s a general trend with plenty of exceptions. As the authors of this particular report stated:

“…not all markets are slamming into reverse. In fact, there are still housing markets expected to be white-hot in 2019 — and realtor.com®’s economic team found them. These are the 10 top superstar metropolitan areas where both the number of sales and prices are expected to jump in 2019, bucking the national slowdown trend.”

Related: Is 2019 a good time to buy?

Lakeland Named Hottest Housing Market for 2019

The housing market in Lakeland, Florida made the “hottest” list last year, as well. It was ranked fifth among major metro areas in early 2018. In 2019, it moved into the number-one position in the realtor.com ranking.

The group predicted that home sales in the Lakeland area would rise by 5% in 2019, while home prices would go up by 7.4%.

To determine which real estate markets might be the strongest in 2019, the company analyzed the number of existing home sales and their prices, along with the amount of new home construction. They did this for the 100 largest markets across the U.S. They also researched the “local economies of each area, along with population trends, unemployment rates, median household incomes, and other factors.”

As of January 2019, the median home price in Lakeland was around $160,000 according to Zillow. Coincidentally, they too are predicting that prices in the area will rise by 7.4% during 2019.

In January, Zillow’s research team stated:

“Lakeland home values have gone up 9.3% over the past year and Zillow predicts they will rise 7.4% within the next year.”

Related: 8 markets that are heating up

Limited Supply Boosting Home Prices

As usual, there are supply and demand factors behind these bold forecasts for the Lakeland, Florida real estate market.

Like the other metro areas included in the “hottest markets” report, Lakeland has a relatively low level of housing supply right now. Meanwhile, the area’s population has grown steadily over the past decade, bringing more buyers into the market.

In the early 1990s, the city of Lakeland had a population in the low 70,000 range. In 2019, the population is approaching 110,000. The broader metro area, which includes Winter Haven, had a population of around 666,149 when last measured.

Meanwhile, housing inventory in the area (i.e., the number of homes that are actually listed for sale) remains fairly low. Toward the end of 2018, the Lakeland real estate market had about a three-month supply of homes for sale. That’s well below the five to six months that is considered to be a “balanced” real estate market.

So the housing scene in Lakeland tends to favor sellers over buyers, due to the somewhat constrained inventory conditions in that market.

Given all of these factors, it would not be surprising to see this city (and the broader metro area) outperform the nation in 2019 in terms of home-price appreciation. And according to the analysts at realtor.com, Lakeland could be the hottest housing market this year.

The key takeaway for home buyers: Prices in this market are expected to rise at a steady pace throughout 2019. So you might want to consider making your purchase sooner rather than later, to avoid higher housing costs down the road.

Disclaimer: This article contains data and predictions provided by third parties not associated with the Home Buying Institute. They’ve been presented here as an educational service to our readers. The publishers of this website make no claims or assertions about future housing conditions.

Coming attractions 2019

Why 2019 Could Be a Great Time to Buy a Home

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.

Related: 8 markets that are heating up

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.

Related: 3 mortgage trends we might see

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.