According to the latest data from the U.S. Census Bureau, the U.S. homeownership fell for the first time in more than two years in the first quarter of 2019, falling from 64.8 percent in the fourth quarter of 2018 to 64.2 percent. Real estate analysts see the first-quarter drop in the homeownership rate as a minor interruption to momentum they foresee in the coming months.
Realtor.com has released a revised 2019 housing forecast that is more positive, with a stronger outlook for the real estate market this year than originally forecasted. The online real estate website is now expecting lower mortgage rates of 4.5 percent by the end of the year, a higher home price growth of near three percent, and stronger home sales.
"The 2019 housing market is different than what we predicted in fall 2018, primarily due to an unexpected drop in mortgage rates in January 2019," said Danielle Hale, realtor.com's chief economist. "We believe 2019 will be characterized by lower, but still increasing mortgage rates that will buoy home prices and sales by boosting buyers' purchasing power beyond what we initially projected. This will create a slightly hotter, but still cooling housing market relative to the initial forecast five months ago."
Realtor.com, which is operated by News Corp subsidiary Move, Inc. under a perpetual license from the National Association of Realtors, forecasts that lower mortgage rates will encourage buyers frustrated by high home prices to resume their home search. At the end of 2018, mortgage rates neared 5 percent and interest rates were expected to rise again in 2019 due to economic growth, but the Feds have backed off from future rate hikes, at least for the time being.
"The drop in interest rate increases a buyer's purchasing power and for those on a 30-year fixed rate mortgage it can mean a savings of thousands of dollars over that period," explained Alan Barbic, president of the Silicon Valley Association of Realtors.
In the Bay Area, more inventory, moderating home prices, and lower mortgage rates have slightly boosted affordability. Barbic noted, "All this is good, but it doesn't change the reality. Millennials are eager to enter the housing market but even with their good incomes there is virtually no inventory at the price point that they can afford. It's a matter of supply and demand. The only way we can improve our housing market situation and boost the homeownership rate is to build more housing."
Barbic and about 60 members of the Silicon Valley Association of Realtors were among the over 2,000 California Realtors who traveled to Sacramento this week for the California Association of Realtors annual spring business meetings. While there the Realtors planned to meet with their state legislators and discuss real estate-related issues, including a number of housing-related bills which the state Realtor group is sponsoring or supporting.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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