The 2019 real estate market is likely to continue the trends that we’ve seen developing over the last six months – home sales are going down, prices are still going up slowly, and overall the market is shifting to the buyer’s favor. Here are a few key predictions from Forbes and the California Association of Realtors that anyone who works in fix & flip investing should consider in 2019:
- Affordability will continue to go down.
Though the tightening of the market means that home price growth is slowing, prices are still expected to rise in 2019. At the same time, the federal mortgage rate is predicted to rise about 5%, which means that the costs of buying a home will go up. New houses are finally starting to appear on the market, but construction is far from catching up with demand, and all of this means that many potential buyers simply won’t be able to afford the houses that they want.
In terms of house flipping investing, this means that many flippers should keep their focus on neighborhoods and metro areas where affordability is less of an issue. By focusing on up-and-coming neighborhoods in particular, house flippers can help ensure that target buyers will be both eager and able to buy the properties that they flip.
- Millennials will make up the largest segment of the buying market.
In 2019, the largest chunk of Millennials will turn 29, which is the prime age for buying a first home. Millennials are expected to account for 45% of all new mortgages in 2019, followed by 37% for Gen X and 17% for Boomers. While first-time Millennial buyers may struggle with affordability, older Millennials (those in their mid-30s) will be on the lookout for upgrade homes. 2020 is expected to be the peak Millennial home-buying year.
For house flippers, this means that higher-end homes in high-demand areas like San Francisco, Los Angeles, and San Diego could also be smart investments. The key will be focusing on homes that appeal to younger buyers who are starting families. Flex spaces and proximity to good schools and amenities should be top priorities.
- New technologies and companies will continue to disrupt the industry.
It’s no secret that new companies with a lot of funding are essentially trying to turn flipping into an anonymized super-business. The day when everyone buys and sells homes entirely online is still likely a long way off, but that doesn’t mean that change can’t happen fast.
Flippers ranging from hobbyists to big-time investors would be wise to carefully track updates in technology related to the housing market. You may just discover new tools that aid you in your business.