How’s the market? Is my home going to be worth more or less in 2019?
These are questions that any leading real estate professional gets on a daily basis. The Real Estate Market had a tremendous 2018. Many sellers took advantage of motivated buyers, while their homes experienced near double-digit appreciation.
For 2019, we expect much of the same. Typically a strong economy with low unemployment and reasonable interest rates will lead to another year of strong housing for the Twin Cities market.
2019 Real Estate Forecast
Jarrod Peterson, CEO of the Jarrod Peterson Real Estate Group with Edina Realty, and his team are leading realtors in the Maple Grove and surrounding areas, and are anticipating a few trends for the year, including:
- Builders will face land and labor challenges that will impact supply. The building costs rose dramatically in 2018, and that will continue this year. High costs of land and labor along with tariffs put more pressure on builders to raise their prices. Margins are lower, so more builders will choose to build at a higher price point.
- Home values will rise, but at a slower pace. The National Association of Realtors predicts a 3 percent increase in 2019 over 2018. Realtor Jonathan Brenny of Jarrod Peterson Real Estate Group adds that “for buyers, this is a good thing. We experienced an 8 percent appreciation in the median sales price in 2018, so slowing the growth of that helps buyers across the board, while still providing a good return on investment to sellers.
- Millennial buyers are ready to purchase. There is a generation of 48 million millennials who want to buy homes and are getting settled into careers and household formation. They want to purchase, and they want realtors to help them with the process.
- The seller’s market will soften. Overall, the pace of sales has slowed compared to a year ago. Realtor Lynn Chheang is with the Jarrod Peterson Real Estate Group and says, “Inventory shortages will continue to happen at certain price points, but we are building more inventory in that 450-600K purchase price across the metro. Overall, this will slow down the pace of the market.”
- Mortgage interest rates will remain constant: We have been saying it for years: these low interest rates cannot last forever, and in 2018 we saw the rise they took. The Mortgage Bankers Association predicts that mortgage rates will be maintained in the low 5 percent range.