2019 Economic and Housing Forecast

What a year it has been for both the U.S. economy and the national housing market. After several years of above-average economic and home price growth, 2018 marked the start of a slowdown in the residential real estate market. As the year comes to a close, it’s time for me to dust off my crystal ball to see what we can expect in 2019.

The U.S. Economy

Despite the turbulence that the ongoing trade wars with China are causing, I still expect the U.S. economy to have one more year of relatively solid growth before we likely enter a recession in 2020. Yes, it’s the dreaded “R” word, but before you panic, there are some things to bear in mind.

Firstly, any cyclical downturn will not be driven by housing.  Although it is almost impossible to predict exactly what will be the “straw that breaks the camel’s back”, I believe it will likely be caused by one of the following three things: an ongoing trade war, the Federal Reserve raising interest rates too quickly, or excessive corporate debt levels. That said, we still have another year of solid growth ahead of us, so I think it’s more important to focus on 2019 for now.

The U.S. Housing Market

Existing Home Sales

This paper is being written well before the year-end numbers come out, but I expect 2018 home sales will be about 3.5% lower than the prior year. Sales started to slow last spring as we breached affordability limits and more homes came on the market.  In 2019, I anticipate that home sales will rebound modestly and rise by 1.9% to a little over 5.4 million units.

Existing Home Prices

We will likely end 2018 with a median home price of about $260,000 – up 5.4% from 2017.  In 2019 I expect prices to continue rising, but at a slower rate as we move toward a more balanced housing market. I’m forecasting the median home price to increase by 4.4% as rising mortgage rates continue to act as a headwind to home price growth.

New Home Sales

In a somewhat similar manner to existing home sales, new home sales started to slow in the spring of 2018, but the overall trend has been positive since 2011. I expect that to continue in 2019 with sales increasing by 6.9% to 695,000 units – the highest level seen since 2007.

That being said, the level of new construction remains well below the long-term average. Builders continue to struggle with land, labor, and material costs, and this is an issue that is not likely to be solved in 2019. Furthermore, these constraints are forcing developers to primarily build higher-priced homes, which does little to meet the substantial demand by first-time buyers.

Mortgage Rates

In last year’s forecast I suggested that 5% interest rates would be a 2019 story, not a 2018 story. This prediction has proven accurate with the average 30-year conforming rates measured at 4.87% in November, and highly unlikely to breach the 5% barrier before the end of the year.

In 2019, I expect interest rates to continue trending higher, but we may see periods of modest contraction or leveling.  We will likely end the year with the 30-year fixed rate at around 5.7%, which means that 6% interest rates are more apt to be a 2020 story.

I also believe that non-conforming (or jumbo) rates will remain remarkably competitive. Banks appear to be comfortable with the risk and ultimately, the return, that this product offers, so expect jumbo loan yields to track conforming loans quite closely.

Conclusions

There are still voices out there that seem to suggest the housing market is headed for calamity and that another housing bubble is forming, or in some cases, is already deflating.  In all the data that I review, I just don’t see this happening. Credit quality for new mortgage holders remains very high and the median down payment (as a percentage of home price) is at its highest level since 2004.

That is not to say that there aren’t several markets around the country that are overpriced, but just because a market is overvalued, does not mean that a bubble is in place. It simply means that forward price growth in these markets will be lower to allow income levels to rise sufficiently.

Finally, if there is a big story for 2019, I believe it will be the ongoing resurgence of first-time buyers. While these buyers face challenges regarding student debt and the ability to save for a down payment, they are definitely on the comeback and likely to purchase more homes next year than any other buyer demographic.

Originally published on Inman News and the Windermere.com Blog.

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.


Posted on January 8, 2019 at 5:22 pm
Sandi Tampa | Posted in Real Estate Forecast |

Windermere for Kids Day

This is a fun recap of Windermere for Kids Day. Three out of four years, Windermere East, Inc uses our holiday party money to provide Christmas gifts for local families. It’s an elaborate process of first finding the families—my office’s families came from Lake Hills Elementary—then meeting with the families to create wish lists for each member of the family. Then, we meet at 8 AM at Target and shop with a child (the ‘little shopper’, who has been pre-shopped for) from that family. Presents are then wrapped while the families enjoy snacks, crafts and photos with Santa. It’s a feel-good day with meaningful results. Many ‘little shoppers’, including mine, are not allowed to be photographed, so you won’t see me, but I was there enjoying every minute. Thanks Windermere!


Posted on December 18, 2018 at 6:31 pm
Sandi Tampa | Posted in Uncategorized |

November Eastside Stats

 

November stats are in! The market appears to be stabilizing with both October and November having 2.4 months of inventory. Anything less than 3 months of inventory is a Seller’s Market, so we are in a Seller’s Market. Home that are in good condition and well-priced will sell quickly and might go over the asking price. 14% of the homes in November closed over asking price versus November 2017 where 43% sold over asking price (when months of inventory were crazy low at 0.8 months).

Year-over-year we are showing an 11% increase in median pricing; however, this includes condos. If you remove condos from the mix the year-over-year price increase is 4%–this feels more accurate.

Buyer activity in December is strong and there are deals to be had. It’s a great time to be both a buyer and a seller. I can’t wait to see if we will have the typical surge in activity this January.


Posted on December 14, 2018 at 10:01 pm
Sandi Tampa | Posted in Uncategorized |

Complimentary Santa Photos Tomorrow!

We are ready for Santa’s visit tomorrow! Please join us if you can! Details:

11 AM to 2 PM–Dogs welcome from 1 PM to 2 PM

Windermere, Bellevue South, 14405 SE 36th St, Bellevue

Photos will be emailed to you a few days after the event.

 


Posted on December 7, 2018 at 8:12 pm
Sandi Tampa | Posted in Santa |

Where Are Home Prices Headed?

The Home Price Expectation Survey checks in with over 100 national real estate experts every quarter, including Windermere Chief Economist Matthew Gardner. Here’s where they think prices will go:

Gardner predicts our local market will fare better than the nation overall.

“As I look to 2019, I believe home prices in King County will increase 7.8% over the current year.”
– Windermere Chief Economist Matthew Gardner

“The local economy will continue to grow and that will drive demand for ownership housing,” according to Gardner. “Supply will slow during the holiday season before we see a new influx of listings in the spring. With more supply, I believe that home price growth will continue to slow, but values will still increase.”


Posted on November 30, 2018 at 12:47 am
Sandi Tampa | Posted in market update, statistics | Tagged , , ,

Seattle Mariners Ticket Give Away

Saturday, August 6th is the Ken Griffey Jr. Number Retirement Ceremony, and Sandi Tampa Real Estate has two sets of 2 tickets to give away! If you want to 'play' simply go to my Sandi Tampa Real Estate Facebook page (https://www.facebook.com/Sandi-Tampa-Real-Estate-198947938351/) and make a comment on the ticket give away post. I will select 2 names/winners on Monday (8/1) night.

M's Ticket Give Away


Posted on July 29, 2016 at 5:03 pm
Sandi Tampa | Posted in Uncategorized |

Don’t Sell too Quickly

I often hear people enthusiastically say: “They/I sold the house in a day!”. I cringe because I know the seller has probably left money on the table. The below stats (2015 King County single family home sales) beautifully illustrate the point. Controlling the market exposure to 5 to 7 days will optimize your sales price. Selling a home is more than just sticking a sign in the yard—there is an art and a science to optimizing your bottom line.

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Posted on July 15, 2016 at 4:13 pm
Sandi Tampa | Posted in Uncategorized |

Wedgwood Fun

This darling Wedgwood listing is fun! First, it’s heartwarming to have repeat clients who trust me with the sale of their childhood home. Then, the sellers followed our pre-listing advice—pre-inspect, address some inspection issues, some prep, tidy the yard, and invest in staging—and, as anticipated/hoped, the market response is off the charts. I thought the Bellevue market was insane—take it up 2 notches for Seattle. What is extra nice is the high caliber of brokers on the other end. Offer review is tomorrow. It will be interesting to see what happens.

Here is a link to the listing: http://sanditampa.com/listing/WA/Seattle/8762-25th-Place-NE-98115/42945695

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Posted on May 2, 2016 at 9:47 pm
Sandi Tampa | Posted in Uncategorized |

Just Listed in Bellevue

Just listed! Secluded home with Bellevue Schools. Please join me for tomorrow's open house from 11 AM to 1 PM or on Sunday from 1 PM to 4 PM.

http://sanditampa.com/listing/WA/Bellevue/15835-SE-43rd-Place-98006/42935935

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Posted on April 28, 2016 at 8:59 pm
Sandi Tampa | Posted in Uncategorized |

Strong Seller’s Market Continues

The Eastside market continues to be a strong Seller’s Market. There simply isn’t enough supply for the buyer demand. Interestingly, in the last few weeks, the single family home market has seen over priced homes not sell in a weekend (which is a lifetime in this market). Time will tell if this was a Spring Break induced lull or if there has been a slight shift. That said, the condo market is continuing to experience rapid appreciation.

 

Here is a link to the Eastside single family home stats: http://sanditampa.com/eastside-market-stats/ Anything less than 3 months of inventory is a Seller’s Market. We are 1.3 months based on Closed sales and 0.9 months based on Pending sales.

 

Contact me if you want to discuss your home’s value or if you want to learn strategies for winning multiple offers.


Posted on April 22, 2016 at 4:47 pm
Sandi Tampa | Posted in Uncategorized |