Mortgage rates that are expected to hit 5.5 percent by the end of this year plus a continued increase in single-family home prices will make it more difficult to buy or sell a home next year, a realtor.com 2019 housing forecast found.
The Portland and South Portland area is expected to see sales growth decline 0.5 percent, while home prices will rise 4.9 percent in 2019.
A 5.5 percent mortgage rate would increase the monthly mortgage payment an average of 8 percent, putting home ownership more out of reach for first-time, millennial and Generation Z potential homebuyers, the forecast, released Wednesday, said.
Millennials will account for 45 percent of mortgages in 2019 compared to 17 percent for baby boomers.
“Inventory will continue to increase next year, but unless there is a major shift in the economic trajectory, we don’t expect a buyer’s market on the horizon within the next five years,” Danielle Hale, chief economist for realtor.com, said.
“Unfortunately for buyers, it’s only going to get more costly to buy, especially the most-demanded entry level real estate,” Hale said.
Although the number of homes for sale is increasing across the country, most of it is in the mid- to higher-end price tier, not entry-level. Rising mortgage rates and prices will keep a lot of new inventory out of their budget of first-time home buyers, according to realtor.com.
Next year still will be a seller’s market, though less demand in the market will result in fewer bidding wars and multiple offers.
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