For most Americans in 2019, buying a house will be less feasible than renting. With the dynamics of the housing markets as they are, including home prices that are increasing more quickly than rental rates, homeownership is becoming a more and more distant dream for those whose paychecks aren’t keeping up.
The landscape is somewhat convoluted. Rising mortgage rates (Zillow’s prediction is of a 5.8% interest rate by December 2019 for 30-year mortgages) are leading to higher, more unaffordable, monthly payments. People just can’t keep up, so they continue to rent instead of buy houses.
Add to this the upward trend of home prices. In some places, they are increasing every year by 6.7%. Not only do homebuyers have to compensate for increased interest rates, but they also need sufficient income to pay for more expensive homes. The 2018 U.S. Home Affordability Report, published by ATTOM Data Solutions, revealed that median home prices are the least affordable they have been since 2008.
Meanwhile, the average-sized house was more expensive to buy than rent in nearly 60% of the counties reported on in the 2019 Rental Affordability Report.
How will this impact the homeowners who want to sell?
It depends. The buying pool is at a historic low, but home prices are very strong. Throw in the fact that in December 2018 the U.S. existing home inventory sat right at 1.55 million—that’s the lowest it has been in the last five years (other than December 2017, when it was 1.47 million). The number of houses on the market has consistently decreased since January 2014. Bottom line: there are fewer people interested in purchasing a house, but since there are also very few sellers to compete with, it’s still a good time to list your home.
Homeowners still generally sell their houses by enlisting the help of a realtor to put the property on the market, host open houses and showings, take offers, and finalize the sale at the closing table.
Not all go this route, though. Some who want a faster and easier sale choose to sell their home quickly to an investor. Sell My House Houston Pros is such an investor. We do everything we can to take the hassle out of selling your home. We don’t require repairs or inspections; we buy houses as-is. Contact us to request an offer, and we’ll submit one to you within 24 hours, no strings attached.
How will this impact investors with rental properties?
Right now the housing market favors investors with short-term and long-term rentals. It makes sense that with fewer people purchasing homes, that same pool of people will need to rent.
You may be interested in learning that the five most affordable counties for renting, according to BiggerPockets, an online community and resource for real estate investing, are Roane County (Knoxville area) in TN; Rhea County (Dayton area), OH; Green County (Dayton), OH; McMinn County (near Athens), TN; and Peoria County, IL. Unsurprisingly, the most expensive counties for renting are in Virginia, Hawaii, and California.
Aaron Terrazas, Senior Economist at Zillow, says that the 2019 housing market will not look the same as it has for the last several years. In an October 2018 article for HousingWire, Alcynna Lloyd reported that Terrazas agrees affordable housing will be hard to come by and mortgage rates will continue to be on the rise. He says, however, that the market is cooling. As the market settles to its historical equilibrium between buyers, renters, and sellers, there will be more time for buyers to find that perfect home that satisfies both their lifestyles and their wallets.