Caroline Witham is a licensed Real Estate Agent with the California Association of Realtors and part of the Keller Williams Realty, handling properties through the O.C.
2019 Housing Market Forecast
In 2018, the housing market proved to be ever-changing. Modifications to the Federal Tax Code lowered the mortgage interest rate deduction for first mortgages from $1M to $750,000 and a new $10,000 cap on state, local, and property taxes was implemented. The impact of these changes on 2019 home sales in California won’t be fully recognized by potential home buyers until after the 2018 tax filing.
Rates will continue to increase.
According to various housing economists Statistic and data information sourced from Fannie Mae and the National Association of Realtors, the conforming 30-year fixed interest rate is expected to increase from 4.5% in 2018 to a range of 4.8% to 5.3%. Most of this increase has already begun to occur.
Higher home prices add further strain to home affordability.
According to the Mortgage Bankers Association, national home prices are speculated to increase 4.5%. Locally, the California Association of Realtors and Chapman University forecast home prices to increase to 3.1%. Proving buying a home is a solid investment with your money with equity building almost instantly.
Increased inventory of homes for sale means longer market time.
Nationally, according to National Association of Realtors, there are 3.9 months of housing supply available for sale as compared to 3.5 months available one year ago. Locally, the California Association of Realtors states there are 3.3 months of housing available as compared to 2.9 months of supply one year ago. The slight increase in inventory has resulted in longer market time for homes. We have stabilized a bit so expect to see homes staying on the market 30-45 days now.
Changes to conforming loan limits open up the market to more buyers.
In response to the continuing rise of home prices, the Federal Housing Finance Agency announced an increase to the 2019 conforming loan limits by 6.9%;
Non-high-cost area counties increased from $453,100 to $484,350; and
High-cost-area counties (such as Orange and Los Angeles) increased from $679,650 to $726,525
This is good news, particularly in high-cost areas throughout Southern California, as it allows lenders to offer lower interest rates with more flexible terms.