US Home Price Predictions
Home prices rose 5% year over year last November. And recent reports from NAR, Case Shiller, and Zillow suggest resale house prices will rise in most cities in 2019. This is despite a recent slowdown in sales, rise in listings, growing interest rates, and more new construction becoming available.
After the China Tariffs take effect, more business will return to the US and that will stimulate higher wages, employment and home buying. Corporations are said to be ready to buy back stock, and that could raise the DOW S&P NASDAQ to record levels. That will instill more confidence.
The wild cards are Powell’s higher interest rate obsession, Trump economic stimulus, Democrat blocking, and media fear mongering. The target is consumers because consumer confidence is the key. Recent turmoil has some wondering if a recession is imminent. But experts say no. No housing crash, no stock market crash, and they predict no recession.
Is this the best time to buy a home? Will buyers get a break later on in 2020 if they wait? Is this a buyers market? It just may be the right time as the forecast is a return of price growth after the current slowdown.
Can you assess a housing market without looking at:
- economic predictions,
- consumer confidence
- wages and employment
- GDP and trade deficits
- stock market predictions?
After the pre-tariff import rush, manufacturing was expected to plummet for at least a few months, but January’s manufacturing output has risen strongly.
Employment confidence is very high (except government) and as wages grow, homebuyers will feel confident enough in buying a home.
Check the health and predictions for major cities: Los Angeles, New York, Seattle, Chicago, Philadelphia, San Diego, Miami, Boston, Bay Area, Sacramento, and Atlanta. See forecasts for California housing and Florida housing markets.
Reuters polled a number of housing market analysts at the end of a weak month in home sales, and this is still what they believe going forward to 2019:
Pressure Greater for a Resurgence of Home Prices
Experts look at the Case Shiller report on resale home prices for guidance. Their latest chart shows steady upward growth. So although December’s home prices flattened, the pressure is upward. When you consider the latent demand for housing from Millennials in their family formation years, it would take a big economic shock to push home prices down.
They recently reported that national home prices grew 5.5% annual rate in September. Their 20-City
Composite index rose 5.1% year-over-year. Las Vegas, San Francisco and Seattle reported the highest year-over-year gains among the 20 cities. Las Vegas led the way with a 13.5% gain, San Francisco was up 9.9%, and Seattle rose 8.4%.
Adjusted Home price Forecast are anticipated to increase 3.9 percent and existing home sales are forecasted to increase 1.9 percent to 5.46 million homes. Interest rates are expected to reach 4.5 percent due to higher expectations for inflationary pressure in the year ahead — Realtor.com Research
Freddie Mac Forecast
Freddie Mac points to higher mortgage rates until they throttle the economy in 2020. If the economic forecast is dire, then interest rates would fall. Higher rates would serve to raise home prices, if the economy hangs in there.
Zillow Home Prices
Zillow provides a helpful snapshot of the market health and average home values in October.
Forisk forecasts solid levels of home construction peaking in 2023 and sustained to 2027, although tailing due to satiated demand and rising interest rates.
From the chart below, the Case-Shiller Home Price Index, building permits, housing starts, home sales, will rise slightly next year and significantly grow to higher levels in 2020. Home prices may rise another 10% by 2020 according to their forecast. Still a good time to look for houses for sale.
And from a reuters news report on the economy, Joel Naroff, chief economist at Naroff Economic Advisers is quoted as saying, “Everything seems to be moving in the right direction in the economy … The weak links are recovering and the strengths are staying strong. The Fed is not going to continue doing nothing.” That would mean he expects the Fed to raise interest rates, and that would push the US dollar to further highs.
Best Cities to Invest?
Cross reference this compiled list of cities with a previous post on best cities to buy property.
For rental income, Silicon Valley, Los Angeles, Dallas, San Diego, and Boston might be best picks. It might be a case of the usual suspects, but start here, work your way to the best zip codes and neighborhoods, types of house, employment growth, and migration patterns of Millennials, and you may have yourself a winner (real estate investment). Who knows which cities will rule after 4 years of the Trump overhaul of the US government and US economy?
Top Home Price Growth Trends
Price growth varies each quarter. These are the latest prices from Kiplinger. California cities come in as the least affordable in the nation. New York, Washington DC, Honolulu, and Seattle are right up there.
|Rank||City (updated Jan 2019)||Price Rise over last year||Sales Growth||Average Home Price 2015 – Kiplinger|
|1||San Francisco-Oakland-Hayward, CA||8.41%||1.17%||$750,000|
|2||San Jose-Sunnyvale-Santa Clara, CA||8.26%||1.26%||$1,000,000|
|5||Los Angeles-Long Beach-Anaheim, CA||6.90%||6.03%||$605,000|
|6||Salt Lake City, UT||6.66%||4.67%||$301,000|
|8||San Diego County, CA||6.47%||4.89%||$530,000|
|10||Providence-RI Warwick, MA||6.31%||4.09%||$246,000|
|15||Atlanta-Sandy Springs-Roswell, GA||5.93%||2.67%||$190,000|
|16||Grand Rapids-Wyoming, MI||5.77%||4.16%||$155,000|
|19||Greensboro-High Point, NC||5.50%||3.56%||$118,000|
|21||Oxnard-Thousand Oaks-Ventura, CA||5.19%||5.35%||$565,000|
|25||Las Vegas-Henderson-Paradise, NV||5.06%||4.57%||$240,000|
|28||Riverside-San Bernardino-Ontario, CA||4.98%||6.88%||$276,000|
|32||Tampa-St. Petes, FL||4.84%||5.10%||$176,000|
|33||Palm Bay-Melbourne-Titusville, FL||4.83%||3.14%||$160,000|
|36||Boise City, ID||4.79%||5.28%||$215,000|
|37||Colorado Springs, CO||4.77%||6.71%||$260,000|
|44||Lakeland-Winter Haven, FL||4.64%||4.89%||$146,000|
|47||New Haven-Milford, CT||4.39%||2.60%||$117,000|
|48||Kansas City, MO KS||4.36%||2.66%|
|50||Augusta-Richmond County, GA||4.28%||4.62%||$147,000|
|55||Dallas-Fort Worth-Arlington, TX||4.13%||5.09%||$182,000|
|56||Minneapolis-St Paul, MN||4.08%||3.56%||$235,000|
|57||Oklahoma City, OK||4.07%||4.18%||$155,000|
|59||New York-Newark-Jersey City, NY N.J Pa.||3.99%||6.48%||$425,000|
|60||Miami-Fort Lauderdale-West Palm Beach, Fla.||3.98%||4.17%||$240,000|
|61||New Orleans-Metairie, LA||3.95%||5.94%||$190,000|
|63||El Paso, TX||3.93%||2.85%|
|64||Washington-Arlington-Alexandria, DC VA||3.92%||4.60%||$375,000|
|75||Austin-Round Rock, TX||3.50%||7.40%||$251,000|
|76||St. Louis, Mo||3.46%||4.35%||$155,000|
|80||Buffalo- Niagara Falls, NY||3.36%||2.08%||$125,000|
|81||San Antonio-New Braunfels, TX||3.29%||6.22%||$170,000|
|86||Deltona-Daytona Beach, FL||3.10%||8.23%||$170,000|
|89||Little Rock, AK||2.97%||3.59%||$140,000|
|91||Des Moines, IA||2.92%||4.32%||$173,000|
|92||Cape Coral-Fort Myers, FL||2.91%||5.41%||$200,000|
|93||Baton Rouge, LA||2.87%||5.53%||$166,000|
|95||Durham-Chapel Hill, NC||2.55%||8.95%||$220,000|
|Chart Data courtesy of Realtor.com and Kiplinger.com|
US Real Estate Market to 2020
No Recession in 2019/2020
From a report in the Pacific Coast Business Times, Mark Schniepp, director of the California Economic Forecast is quoted as saying that economic indicators do not point to a US recession this year or next.
Nationwide, consumer confidence is near a seven-year high and corporate profits are trending up, which slumped prior to the Great Recession. Some suggest the DOW and S&P could be heading to record levels by 2020. And even though more people are buying cars and homes, household debt levels are tame. The current seven-year economic expansion is old but it’s not running on fumes, he said.
Schiepp said “We really don’t have any imbalances or bubble concerns. Therefore, at this time, we don’t see any recession — none. If you were wondering about 2017 and all those blogs and articles (forecasting a recession), well forget about them.” Schniepp spoke to an audience at the Hyatt Regency in Westlake Village LA, during the 2016 Los Angeles County and Ventura County Economic Outlook.
The prognosis for housing markets in 2019 is positive and that means rising home prices.
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