Should You Buy A Home? Should You Sell?

The housing market cooled in 2018, and 2019 is likely to be a tough year for buyers and sellers according to analysts. Among the key housing market predictions for 2019: Higher home prices and interest rates are headwinds, though continued economic growth and rising employment should support demand.

Housing Market Predictions For 2019: Tough For Buyers, Sellers

The next 12 months will pose challenges to potential homebuyers and sellers, according to Realtor.com Chief Economist Danielle Hale.

“For buyers, they will have more inventory to choose from, which is a positive, but on the tough side they will see continued rising prices and higher mortgage rates, so affordability will be a challenge,” she told IBD.

Millennials, after delays following the Great Recession, are now the biggest homebuyer group. This huge generational cohort is boosting demand for entry-level homes. However supply remains limited.

The housing market in 2019 is also expected to be challenging for would-be sellers.

“In the last couple of years you could list a home at a high price, get multiple offers within a week or less, and they would be at or above asking price,” Hale said. “For sellers in 2019, people who watched their neighbors have these experiences in previous years, that might be what they’re expecting. But we don’t expect it to be that extreme a seller’s market.”

She said sellers should take an inventory increase into account when pricing their home, and to consider offering incentives to buyers.

More Balance For Housing Market In 2019

Mortgage Bankers Association Chief Economist Mike Fratantoni does sees reasons to be positive about the housing market over the next 12 months.

“I think next year will be closer to a balanced market for buyers, and because of the strong job market, and because you have a lot of millennial buyers entering the market, you’ll see a pickup in home sales through 2019 relative to 2018,” he told IBD.

The days of rapid house price run-ups may be over, MBA’s Fratantoni said. But he believes a calmer interest rate environment in 2019, rather than this year’s series of Fed rate hikes, will benefit the housing market.

“An environment of steadier rates” should encourage first-time buyers to make offers and feel confident they’ll be able to afford that loan.”

Mortgage rates have backed off 2018 peaks in recent weeks, but are still well above the longtime lows for much of the decade. The Federal Reserve raised interest rates for the fourth time on Wednesday, with policymakers predicting two more Fed rate hikes in 2019. Markets haven’t been pricing in any Fed rate hikes in 2019.

Should You Buy A Home In 2019?

Buying a home is one of the most important financial decisions a person will make. Deciding to buy a home comes down to individual circumstances. Are you starting a family? Do you have a steady job with prospects for advancement? The advice of an independent financial advisor can be helpful.

A key rule of thumb is to keep your debt-to-income ratio as low as possible. To get a qualified mortgage, the Consumer Financial Protection Bureau demands a total debt-to-income ratio below 43%.

Does it make more sense to rent or buy a home in 2019? The home price-to-rent ratio compares the value of a home vs. what it could rent for over a year. In San Francisco, Los Angeles, New York and Seattle, top-tier cities with few homes on the market, the price-to-rent ratio is far higher than in places like Houston or Atlanta. If you live in a pricey market but no longer want to rent, consider buying a home where they are affordable. A recent trend has been millennials moving out of city apartments to buy homes in the distant suburbs or cheaper parts of the country.

Other key objectives when buying a home include having enough money for a deposit, getting preapproved for a loan and checking your credit score. Make sure that any potential home to buy is somewhere you are willing to live for the long term. If you have or plan to start a family, consider the quality of local schools.

Also, hire a trusted real estate agent. Real estate agents can help you find a home to buy and negotiate the price. But remember, it’s ultimately your decision.

Should You Sell A Home In 2019?

If your home no longer matches your lifestyle, perhaps due to family changes or employment prospects, you may be ready to sell your home in 2019. Forget about national housing market trends. If you’re thinking about selling a home, you want to know if there’s buying demand in your area. That’ll determine how much you can reasonably expect to sell your home for. Keep in mind that you likely will have to pay a real estate commission of around 6% of the sale price. Buyers also may ask for the seller to cover their closing costs.

Also, if you sell a home, you’ll need a new place to live. If you’re upsizing to a bigger home, make sure you have enough equity in your current property to afford the next one.

Sellers should also complete any half-finished remodeling or repairs.

Expert Advice For Homebuyers

If you do want to buy a house in 2019, set a budget before property hunting.

“It’s incredibly important to make sure that you’re taking on a payment that can be sustained over the long haul,” MBA’s Fratantoni said.

But that budget shouldn’t just include a down payment and money to cover mortgage payments, property taxes and expected upgrades. Make sure to have enough cash in reserve for large unexpected expenses. Examples include dealing with a broken-down furnace, a gutter that needs replacing or repairing broken-down appliances.

“Have that budget in place and make that determination of what you can afford before you go shopping for a home,” Fratantoni said. “The problems really come along when someone falls in love with a home and tries to figure out how they can finance it. It’s a much better move to understand your budget before you go shopping.”

Failure to understand what you can realistically afford leads to problems down the line and can even end in foreclosure.

Original article can be found at: https://www.investors.com/research/housing-market-predictions-2019-should-you-buy-home-sell-housing-stocks/