Low Mortgage Rates: Best Time To Buy A House

2018 was a whirlwind year of a year. In 2018 was a good time to buy a house, there was healthy growth in the job market, The Dow Jones hit all-time highs, and many homeowners saw the dramatic rise of a sellers’ market.

By all indication, 2018 has set the economy up for a quite exciting 2019. And one of the more engaging questions for 2019 is “Is it the right time to buy a home?” So to help you out, we decided to list 5 of the top things to consider when deciding if 2019 is the best time to buy a house?

Millennials Are Finally Entering the Housing Market

When we think of Millenials, the first thoughts that come to your mind are Student Loan Debt, Avocado toast, Uber and Facebook and 30-year fixed rate.

With all the negative news surrounding their behaviors and economic struggles, you’re probably not seeing them as America’s number 1 market for home purchasing.

According to a new study published by Trulia approximately 21% of Americans aged 18-34 intend on buying a house in 2019.

This figure is up more than 12% when compared to a poll conducted last year. This means more and more young Americans are going to be entering the housing market in 2019.

This number is also expected to rise as the job market and economy is expected to improve. So it might be a wise decision to beat the competition before they show up in droves.

Lock in a Lower Mortgage Rate

Mortgage Trends According to Benjamin Franklin, the only three guarantees in life are death, taxes and mortgage rates increases.

2018 proved to be a year of significant mortgage payments. Mortgage interest rates increased 15 of the first 21 weeks of 2018. Rates went from 4 percent to 4.66 percent before leveling off during the summer. A similar pattern is expected to occur in 2019.

Mortgage Rate Forecast: Mortgage rates are currently hovering around 4% for a first time home buyer.

Many experts are predicting that the Fed is going to raise mortgage rates at least twice in 2019. Zillow is predicting that mortgage rates are expected to rise to about 5.8% by the end of 2019.

So as it stands, buyers currently find themselves with a very narrow window of opportunity. So if you’re on the fence about buying, looking in a lower interest rate may be a deciding factor.

Lower Rent Costs Equals More Opportunity for Buyers

As more and more renters become owners, the pool of renters is starting to shrink. This trend is now forcing landlords to compete over renters. As a result, monthly rent prices are starting to decline in areas all across the country. Even expensive rental markets such as Portland saw a 2.2 decrease in monthly rent prices.

This trend means that households will get to keep more of their take-home pay. These extra savings will help enable more Americans to start setting aside money for down payments or closing costs. Lower rents will also enable more people to move into hot real estate markets.

This will create a healthy flow of new residents into new areas. The flood of new residents will bring new money into these areas and help boost cities themselves.

This might be an excellent time to invest in a home for sale and capitalize on this new trend.

Best Time to Buy a House in 2019

While new construction is starting to pick up nationwide, it’s still at a historic low. This is due to a variety of factors. However, one of the biggest issues affecting new construction is the Trump trade tariffs. This is because the United States’ construction industry sources many of its supplies from China.

The trade tariffs are expected to add an additional 1 billion dollars in tariff-related costs to the home construction industry. As with many businesses, homebuilders and developers will ultimately have to pass these costs along to the consumers. This will result in a depressed demand for new housing being built.

While the construction industry can attempt to alleviate the tariffs by changing who they source from, this process will not be an easy one.

For the past several decades China has been a major player in the United States construction industry. It will not be easy for the industry to suddenly find and change partners due to these tariffs. This revamping of the construction industry will definitely slow the construction of new homes.

Another factor affecting new construction is the lack of labor. The need for construction workers and tradesmen continues to grow while the labor pool is increasing small.

Without workers to actually build the homes, developers can expect to see a backlog of work pile up. The lack of new construction will increase pressure on existing home prices, driving them upward. Buying now may ensure that you don’t get caught at the wrong end of a price increase.

Best Time to Buy a House: Baby Boomers Are Staying Put

The Baby Boomer generation has the highest percentage of homeownership. The US Census Bureau reports that roughly 69% of Baby Boomers own their own homes. And it was long expected that once the Boomers reached retirement age, affordable homes would flood the market. But so far that hasn’t been the case.

It’s According to a recent poll by Realtor.com, 85% of Baby Boomers said that they were not planning to in the next year.

This refusal to sell is putting tremendous pressure on already low inventories. Ironically one of the major causes of the Great Recession the oversupply of new homes.

There are not enough new homes on the market to fill the demand. With this dynamic in play, one can expect that home prices will continue to rise due to this lack of inventory.

SUMMARY

Buy a house now or wait? As you can see, 2019 is on track to becoming a very interesting year in the housing market.

A combination of the factor above is all hitting at the exact same time. Some markets are set to get more expensive, while others are set to become affordable.

And no matter what you decide, these large macros trends are going to affect one way or another.

So it might be the best time to take control of these circumstances and buy a home in 2019.

Published January 12, 2019; Updated August 6, 2019.