Lending Tree, the online lenders marketplace, predicts slower sales in 2019 will give increase inventories. Such an increase could surely benefit homebuyers who have been strangled by the dearth in housing options in recent years.
Lending Tree’s Chief Economist, Tendayi Kapfidze, said, “The medium- and long-term prospects for housing are good because demographics will continue to support (housing) demand. With slow price appreciation, incomes will have a chance to catch up and with slower sales, inventory has an opportunity to normalize. A slowdown in 2019 creates a healthier housing market going forward.”
Lending Tree additionally predicts that interest rates are likely to rise to about +5.5% by the end of 2019. Lending Tree attributes interest rate fluctuation to income growth as “…growth is above trend and wages are rising…”
Kapfidze sees home price growth at about 3% in 2019. “There may be some localized price declines, particularly in cities where affordability has become a challenge (cities such as Denver, Washington DC, San Francisco, Los Angeles and New York City), but we don’t expect a national decline.”
Cities such as Sacramento, Atlanta, Phoenix, Portland and San Diego are the beneficiaries of the above-mentioned cities. Kadfidze predicts these cities, as well as mid-country cities, will continue to reap the rewards of higher inflows from coastal areas.
No Pollyanna, Kadfidze recognizes some downward pressure is appearing from the declining Mortgage Composite Index that measure the number of mortgages originating and rising interest rates, but, “After the tax cut induced strength in 2018’s (housing market), with growth the fastest since the financial crisis, the economy will slow in 2019. Adding to the challenges in the loss of the stimulus, political concerns will continue to be the source of uncertainty and volatility, which could cause a loss of confidence that suppresses both business and consumer spending.”
Bottom line, Kadfidze and Lending Tree believe the nation’s strong labor market will form the basis for growth in the housing market in 2019 and that the economy will not be driven into a potential recession.