We’re already a quarter of the way through 2019, and the real estate market is well underway. So, what can you expect from here on out until the end of the year? Let’s take a closer look:
A Competitive Seller’s Market
Minnesota’s competitive seller’s market will continue in most areas of the state in 2019. Although mortgage rates remain historically low, brokers predict that rates are expected to climb 5-6 percent throughout 2019 and buyer demand may slightly decrease. Buyers who want to purchase homes in primary markets or large cities are moving outside to territory markets and smaller towns, which has put a huge amount of pressure on those markets, causing prices to rise.
However, there is a slight stall in some primary markets because home buyers are pushing back on urban prices and choosing tertiary markets to get more home for their dollar. Homes in Minnesota are overall affordable, and the outlook for housing in 2019 is still strong.
Experts predict we may see a general economic slowdown, but that won’t happen until late 2019 or 2020. Buying a home still remains the most stable investment a buyer can make this year.
A Balanced Market in 2019
There are several reasons why the Minnesota market may begin to balance in 2019 in addition to interest rates:
● There is a slightly diminishing buyer demand due to prolonged lack of inventory
● Builders in suburbs and rural areas are building more affordable homes
● More millennials and homeowners who sell before they find their next home are renting in market-to-luxury rate apartments
Home prices are increasing at a much slower pace than this time last year, which may cause the market to start to balance out in some parts of the state.
Rising Costs of Homes
While there are several new affordable homes available in the suburbs and rural areas, overall the rising cost of newly built homes is outpacing buyers’ abilities to pay for them. We will likely see a healthier 2-4 percent increase in sales prices, rather than the larger increases of the past couple of years. This is good news in the long run for greater affordability, but sellers may need to adjust their pricing expectations and strategies, as the market may not bear the prices their neighbors received last spring.
While still historically low, mortgage interest rates have been rising slowly to make room for greater economic growth. Many economists agree that we will see interest rates for 30-year fixed mortgages rise to just over 5 percent in the remainder of 2019, which could affect the buying power of some house hunters in the new year. However, some experts suggest that The Federal Reserve will be more patient with raising rates in 2019 based on softening investment activity, trade tensions, housing sales, and other factors.
Flat-Fee Realty Service in Minneapolis, Minnesota
If you are looking to buy a home in Minneapolis, contact Home Avenue today. We offer flat-fee realty service that can save you thousands of dollars in realty fees and costs. You can also take advantage of our cash back rebate incentives, as well as our FSBO services.
To find out more about our products and services, call us at 952-929-7355, or you can send us a message on our contact page.