RISMedia's Real Estate Magazine

JUL 2018

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/996974

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Page 32 of 126

28 July 2018 RISMedia's REAL ESTATE Analysts at Freddie Mac are antici- pating appreciation will decelerate to 3.1 percent in 2019, with home sales to soften at a 2 percent growth rate and total 6.44 million. 2018, however, is anticipated to bear out as it has in recent years—fast-grow- ing prices, which Freddie is pegging to rise 7 percent, and sales up 3.3 percent to a total 6.32 million. What's causing the cycle to shift? One factor is mortgage rates, which have risen steadily this year; in fact, Freddie predicts 30-year fixed mort- gages will have an average 4.9 per- cent rate by the close of 2018, and an average 5.4 percent rate by the end of 2019. At press time, the aver- age 30-year rate sits at 4.66 percent. Climbing costs are not a demand deterrent, however—and even with the change in market momentum, consumers are confident in the economy, which facilitates more spending, including on homes. Em- ployment has gained meaningfully this year, hitting a milestone in the spring, and the economy is expected to grow 2.7 percent, the analysts at Freddie project. With the demand for homes not subsiding, a beef-up in inventory is necessary, says Sam Khater, chief economist at Freddie Mac. "While this spring's sudden rise in mortgage rates is taking up a good chunk of the conversation, it's the stubbornly low inventory levels in much of the country that are pre- venting sales from really taking off like they should be," Khater says. "The underlying demand for buying a home is holding up, and will continue to do so, as long as the economy is generating solid job and income growth. Most markets simply need a lot more new and existing supply to cool price growth and give buyers enough choices." RE Suzanne De Vita is RISMedia's online news editor. Email her your real estate news ideas at sdevita@rismedia.com. 2019 to Bring Change in Market Momentum A lthough demand is exploding and home prices are rising swiftly, analysts are anticipating a market moderation in the next year. According to new projections, the fluctuation is forecasted to start in 2019. by Suzanne De Vita

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