Housing 2019: What Does It Mean To You?

Housing bubble, market crash and mortgage meltdown are just a few of the terms used to characterize the gyrations of the U.S. real estate market over the last decade or so. There’s no shortage of commentary on the topics of housing recovery, market conditions or what the forecast holds for 2019 and beyond, and it runs the proverbial gamut. But what does the condition of the U.S. housing market mean to you? In any given year, it affects everyone because we all need a place to live.

Mortgage interest rates, available housing inventory, affordability, new construction starts and other indicators mean different things to renters, homeowners and investors. But when it comes to housing market news, rather than choosing what to believe, what to watch or even whether or not to pay attention to it, consumers should turn their focus completely to themselves and their goals. If you own a home currently or hope to someday, it’s always a good idea to keep tabs on stories that relate to your situation.

Here are some factors that will likely influence the 2019 spring market:

Affordability has become an issue as home price appreciation has increased for several consecutive years. For the nearly 80% of Generation Z that hopes to buy a home by the time they’re 30, they’ve got their work cut out for them. An analysis by realtor.com® projects that the median home price will rise nearly 50 percent, to $386,310 by 2031 when Gen Z reaches prime buying age. That means they would need to save $304 every month for the next 12 years to buy with a 10 percent down payment plus closing costs on that estimated median priced home. The good news is, it’s possible to buy a home with less money down – and many people do: The National Association of Realtors Profile of Home Buyers and Sellers found that first-time home buyers typically financed 95% of the purchase.

High-income people make up nearly half of renters nationwide according to RENTcafe. There are 2.1 million renting households with earnings of $150,000 or more. RENTcafe spokesperson Alexandra Ciuntu describes it as a mindset, saying, “…monthly rent is a smaller price to pay for having more flexibility or for being able to live closer to jobs, hip city centers, and art districts.” It’s important to evaluate the assumed convenience of renting against the benefits of ownership. Consider the difference between treating housing solely as a recurring monthly expense or an investment with potential returns in the form of equity and appreciation, then base your choice on your long-term plans.

Home values are back, regaining the $9-trillion lost in the crash of the late 00s and subsequent recession. The U.S. housing market reached a cumulative value of $33-trillion dollars at the end of 2018 – $4-trillion higher than the 2006 peak. Home sellers have capitalized on the rebound, with average home price gains since purchase reaching $61,000 in 2018, up $11,000 from the previous year and $21,500 from 2016, bringing seller profits to a 12-year high. Additionally, homeowners are staying put longer. According to First American Financial Corporation, the average time in a home jumped to seven years during the aftermath of the crash between 2008 and 2016, and the most recent data from December 2018 shows that the median length of time someone lives in their home has increased 10 percent compared with a year ago.

What’s interesting about a home is that it is both a need and a means: it’s a universal necessity that can also contribute to financial stability and growth. Renters and homeowners alike should keep tabs on certain things in the market and in their personal lives to be ready to act on or respond to a market shift. Renters should monitor their credit and get their finances and savings on track so they can buy a home – if and when they choose to. Homeowners should check their neighborhood property values, sales activity and their own equity, as well as periodically review their mortgage to make sure it’s the best rate and program available. Real estate and mortgage professionals are great sources of information even if you’re not planning to make a move. Reaching out to them for a quick, no-obligation consult can help you get on course – or stay on track – for the living situation that’s a true fit for you.

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