2018 is nearing an end, and many people are preparing for the new year. Call it a New year’s resolution, or just a new chapter in your life, but many people are curious as to what 2019 might mean for the housing market. If you have been following us at the Chernov Team Blog, you know that 2018 has been an interesting year characterized by a down market in the first three quarters, with an uptick in market activity in the 4th quarter. While we don’t claim to have a crystal ball, this article will identify the various elements that will have an impact on the housing market in general over the next fiscal year.
More Homes Will Be On the Market During 2019, Specifically Luxury Homes
As you are likely aware, one of the hallmarks of the past several years is the ever-dwindling supply of homes on the market. Granted, some homes have made it to the market but not enough to outstrip the ever-increasing demand as millennials reach an age where purchasing a home is no longer a far-fetched dream but an impending necessity. The housing market is finally beginning to recover from the lowest housing inventory in the recent past, and the inventory is expected to increase by roughly 7% over the next year.
This increase in inventory isn’t good news for everyone though, an increase in inventory necessarily represents a shift from a seller’s market to a buyer’s market; this is not to say that there will be a paradigm shift, the market is still a strong seller’s market – just less so than 2018.
Housing Prices Will Remain High
As noted above, the last few years have represented a strong seller’s market, which ultimately results in houses being priced accordingly; in a seller’s market a homeowner can demand a premium price for their property. While an increase in inventory means prospective buyers will have more options, mortgage rates are expected to climb in 2019. Specifically, current mortgage rates are currently stable at 5%, but the rates are expected to increase to about 5.5%, which means that the monthly mortgage payment on homes will be roughly 8% higher; taken in conjunction with the fact that the average American’s income will increase by roughly 3% in 2019, houses will still be unaffordable for most Americans in major cities (including Studio City, Encino, and Sherman Oaks.
Tax Laws Will Have an Unknown Impact
Since most Americans won’t be filing their taxes in compliance with the new tax laws until April 2019, it is difficult to predict the impact these changes in the law will have on interest rates set by the Federal Reserve or the impact it will have on households’ net incomes.
At the Chernov Team we pride ourselves on having a thorough understanding of the housing market both locally and nationally. However, a thorough understanding of the housing market is unattainable to those who are short-sighted. As such, we make an active effort to understand the market proactively in relation to Sherman Oaks, Studio City, and Encino. At the Chernov Team we understand that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves with the most.