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Housing Market Predictions: 2019 and Beyond

10/29/2018 Alena Savchenko

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The United States economy has flourished in recent years, and the housing market continues to gain strength. But with confusing factors like rising mortgage rates, a competitive buyer’s market, and home prices that are higher than any previous peak, many people are unsure about what will happen in 2019.

As more and more people look to become homeowners, nearly all of these potential buyers (along with current homeowners) want to see the housing market continue to do well, as a way of protecting their investment. Here are three predictions from real estate and financial services industry professionals as to what to expect from the housing market.

Prediction One: Crash or Boom?

"I don’t see any nationwide patterns that concern me, and some markets have appreciated way more than others."

One of the most common questions that potential homebuyers have is about the possible ups and downs of the housing marking in 2019 and beyond. With the 2008 crash not far behind us, many buyers wonder what will happen in the future: What is driving today’s rising home prices, and will they drop again?

Gary Lucido is the president and founder of Chicago’s Lucid Realty. Prior to founding Lucid Realty, his corporate experience included over 20 years in customer service, finance, operations, and information services. Lucido is also one of the founders of Shop Local, providing Web shopping services for most of the top retailers in the country. Here is his 2019 housing market prediction—and it does not include a crash.

What’s different this time around is that lending standards have been more stringent and homeownership rates are lower. Back then everyone was buying a home—sometimes more than one. If anything goes wrong this time around it will be a local problem and not nationwide. I don’t see any nationwide patterns that concern me, and some markets have appreciated way more than others.

[In Chicago] our price appreciation has been at the bottom of the nation, so I can’t see prices crashing here. Also, inventory is extremely low and demand seems to be greater than supply so there shouldn’t be any dynamics that precipitate a problem.

Sahil Gupta is the co-founder of Patch Homes, a financial institution focused on unlocking home equity wealth for homeowners. He previously spent a decade leading product development and business strategy for financial technology companies such as Motif (backed by Goldman Sachs, JP Morgan) and Sliced Investing (YCombinator, Khosla Ventures). He agrees that the factors that led to the 2008 crash aren’t present today, and he predicts that the housing market will stay strong in 2019.

While the housing market has seen strong appreciation in home prices over the past few years, we don't believe that there is an imminent risk of a crash again. Unlike the 2008-09 housing bubble that was caused by reckless lending standards of financial institutions, this time home prices in major parts of the country have been driven by a systematic imbalance between supply and demand.

Supply side constraints such as zoning laws and the rising costs of housing construction have contributed to the home prices run-up. Either of these factors are showing no signs of slowing. On the demand side, incomes in areas like San Francisco Bay Area, Seattle, etc., are driven by a technology boom, leading to buyers having strong purchasing capacity as well.

Prediction Two: A Safe, Stable Investment

A house is one of the most significant purchases you will ever make in your life. Even if the market continues to rise (and we avoid a crash), is it the right investment for you and your individual goals? Will the changes coming in 2019 help you or hurt you?

Gil Chowdhury started his career in real estate before finishing college, simultaneously working and studying full time. Today, he is one of the top brokers in the very competitive New York City market. He predicts that real estate will continue to be a solid investment, and that the market will overall become more balanced in 2019.

For the next 10, 20, and probably even 50 years the housing market will be what it has been, an opportunity to enter an asset vehicle by fulfilling an absolute need, shelter. Housing will remain an investment opportunity for individuals, families, and even institutions to capitalize on the most basic of human needs. Investing in real estate in 2019-2020 could be a mistake, but it probably wouldn't be unless people stop needing shelter from the elements.

The immediate trend I see is a shift into what I believe is a healthier overall market. For the last decade the market has either strongly favored either buyers (2009-2012) or favored sellers (2013-2015). In 2019, the market will be re-establishing equilibrium.

Dan Green, is a former loan officer who is now the founder and CEO of real estate news site and mortgage education company Growella. He anticipates continued growth in the 2019 real estate market.

Rising mortgage rates aren't slowing the Millennial Generation's desire for homeownership. Pent-up demand will continue to unfurl through 2019, moving home values up across all price points. Like all markets, housing is defined by supply and demand. And, so long as supply and demand remain within tolerable ranges, housing will continue to be a good investment.

Prediction Three: Technology and the Housing Market

Real estate is one of the industries that has been transformed by technology, and the changes keep coming. From lending criteria to virtual reality home showings, here are the ways that our experts see innovation continuing to change the housing market in 2019.

Saideh Brown uses her New York City native knowledge as a luxury agent in New York and New Jersey who specializes in athlete relocation. Prior to her career in real estate, Brown led an NGO at the United Nations that focused on women’s empowerment and leadership. She predicts that lenders in 2019 will start catching up to the ways that many people earn a living today.

Mortgage lenders are beginning to factor in gig-work for mortgage approval. This is only going to become more prevalent with the current job market. Banks are looking into all sources of income and gig-work is quickly becoming a primary source of income for millennials and must be factored in to get an emotional buy-in to homeownership from this generational block.

Jarred Kessler is an entrepreneur with over fifteen years of experience in the financial services industry, working for industry leaders like Morgan Stanley, Credit Suisse, and Goldman Sachs. He is now the CEO of EasyKnock, applying his knowledge of industry innovations to real estate. He predicts that the housing market will continue to feel the impact of technology in 2019 and beyond.

We’ll continue to see drastic changes over the next couple years, the likes of which weren’t seen in real estate over the course of decades before the advent of the internet. Here are a couple things I expect to happen in 2019 and 2020.

First, people are looking for ways to release the equity they’ve built in their homes. Before they would have to resort to home equity loans, HELOCs, or reverse mortgages (if they were of age). The need for equity release has driven companies to create new options like residential sale leaseback like EasyKnock offers, which was never done on a large scale before now.

Second, companies are offering newer, faster, and easier ways to sell homes. Advances in technology have lead to more effective ways to view real estate listings. Virtual reality and 3D viewing programs can allow buyers inside of a home while they’re not even in the same country. Instant offer home sales are available through multiple companies like Opendoor and Zillow. They are carried out almost entirely over the internet.

How to Predict Your Own Happiness

No one can exactly anticipate the future, but doing careful research on your chosen market can ensure that you buy a home that both protects your investment, and most importantly, provides enjoyment for you and your loved ones. If you are ready to be a part of the 2019 housing market, start with our online pre-approval process today, or contact a PennyMac Loan Officer to learn more.

The views, information, or opinions expressed in this blog do not necessarily represent those of PennyMac Loan Services, LLC and its employees. Further, the inclusion of links to third party sites is not intended to assign importance to those sites and the information contained therein, nor is it intended to endorse, recommend, or favor any views expressed, or commercial products or services offered on these third party sites, or the vendors sponsoring the sites.