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Housing Market Predictions

Posted by ranarealestate on October 14, 2020

As if there was going to be another year of intense markets and bidding wars for houses yet purchased, it seems apparent that this year’s housing market is to be a rather slow and steady one than its predecessors, which realistically began during 2018 with its housing market. How that year began as hot as it can be for the time until, throughout the year, the buying waned off and fell thanks to higher prices and little choice given to the buyer, leaving them to do nothing than to pay for their very first home.

There still remains the issue of affordability as we go through the 2019 year. For many in the market, there is much concern for rising mortgage rates, another courtesy is given by 2018’s market as well as its other issues that transferred onto the 2019’s market, but not by a whole lot as there are some expectancies of it loosening throughout the year. Of course, the volume of each price is expected to rise as well, causing fewer buyers to show up when the time presents itself.

Lawrence Yun from the National Association of Realtors states that for home sellers, there needs to be a consensus among them that the frenzy market days are no longer coming back, at least until there is any evidence pointing towards its return. With that mindset, these sellers need to strike the market with competitive prices in the market more so than ever in order to sell a house. He also states for the buyers, the main issues will be the interest rates that will rise, but that they will have more time to make a decision.

For many, especially cash-strapped buyers, they will be lucked out in the home-buying process. The more potential buyers will have more of an upper hand as they will still be placed to make their decision in the market to stay in their current home and renovate it as much as they can and enjoy the low mortgage rate it already has. In terms of the prices in the market, they are to rise as the people in the housing market begin to acclimate to their current statuses.

More Home Options

Among the many complaints in last year’s market, the lack of homes was a major issue. For the past several years, in fact, there weren’t enough homes to choose from for many home-buyers as there weren’t many being sold on the market. A reason for this was due to how it dropped around 2017’s winter season, which continued onto 2018, slowly being rebounding those efforts steadily. This also leads to more bidding wars in the market, price increases, and the emotional state of utter frustration of not being able to afford the house of their choosing.

For the supply crunch, there are some predictions of alleviation during the 2019 market. Inventory is said to rise around 10%-15%, Yun predicts, but this increase will affect more towards the mid-to-high ends of the housing market. This will lead to houses being priced around 250,000$ and more, especially if they were newly built.

Danielle Hale from does provide good news to the matter. She says that it will be beneficial for the move-up buyers, but it won’t be as beneficial for the millennial buyers that are looking for a house.

Houses Of All Kinds

For many first-time buyers, there isn’t much to be expected, but it wouldn’t hurt to be open-minded during these hard times in the market. It would be wise for these types of buyers to find more options besides the single-family houses. Mobile homes, townhouses, would be of use to them at least for temporary households until the time is right for them to get better deals.

According to Robert Dietz from the National Association of Home Builders, he claims that mobile homes are expected to be finished at a rate of 100,000 units a year, having a 7,000 increased since 2017. He believes that the trend will continue to grow in the later portion of the year.

Mobile homes and townhouses are also slightly cheaper. The mere cost of a mobile home averages around 70,600$, which is very different than a 250,000$ single-family house that is still around to even 300,000$ for those that are new homes. For townhouses, there are some growth as well in their establishment.

Hardships of Affordability

The values of the housing market are still expected to rise this year and even in 2020. Yun believes that the price growth stayed around 2% to 3% in recent years and over 5% in the later ones such as 2017.

Mortgage rates are expected t rise simultaneously with the modest price growth. The rate is to increase by around 5.5% within the 2019 housing market, roughly towards the end. With these combined factors, it appears apparent that for many home-buyers, it will be far more expensive to purchase a home. According to Hale, the interest rates and increase in prices can lead to an increased estimate of 8% in the monthly mortgage payment fees.

Interest Rates

With the lack of affordability and the inventory being short, many first-time buyers would have to sit out from the market for the year and possibly next year if the trend continues. The reason is due to how the numbers aren’t as favorable to their side of things.

Even homeowners have tried to sell their homes are to stay put as well. With rising mortgage rates and the overall increase in prices, it’s bound to be a trap laid out for the seller. As stated from a report done by Black Knight, since many of them have an already low mortgage, more than what is being given currently, there would really be no reason to move away from the house considering how hot the market has been. To them, it would be more expensive to simply buy back their homes.

Lingering Taxes

For the first few months or so of the 2019 year, there will be some tax changes that can affect the homeowners and the marketplace. One of these changes involves a mortgage deduction in its interest. Before this happened, many homeowners would deduct the interest themselves and would pay at least around a million dollars in their debts, which included interest on their home equity loans and credits, reducing the amount of income that would be taxed.

With the new rule, however, the deductions can be around 750,000$ in the debt. The interest, as well as home equity loans and credit, would be deducted, but only if the funds were used for home improvements and other means of renovating the house. Only those that would end up maximizing their limits in the tax paying process would be the home-buyers and homeowners that are high-end in the market. Those with multiple mortgages to pay would have to as well.

A question then arises due to this new rule: how would these deductions affect the more high-tax marketplaces such as New York and New Jersey? As well as California?

For the buyers, it may seem that they wouldn’t cave in into buying a new home in those areas or even choose other options such as a smaller home when the calculations of the payment would still be much even in the non-deductible taxes that they need to pay.

If anything, the market would be at a soft spot at the moment because of these reasons compared to the rest of the country alone as these caps can hurt many homeowners.

The Bottom Line

For the sellers, then the prices would need to be at a realistic range in order to sell. Be prepared to cut the listing prices in order to seal the deal on the selling house. The sellers would also need to more open-minded and ready for competition, especially when it comes to the more expensive properties.

For the buyers, going slow on the deals are alright at the current state of the housing market. Since there are barely any competitive prices and hot markets overall, the buyers can take their time towards getting the desired home that is well around their budget.

Rana Khanjani, MBA
San Fernando Valley Iranian-American Real Estate Agent

Providing Services in English and Farsi

Phone: 818.723.9071
Address: 22020 Clarendon St. 200, Woodland Hills, CA 91367

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