From Dennis and Jane and Lee Guertin | Guertin Family Realty | (952) 442-1300 |
The year is off to an eventful start! Let's look at what experts predict for the housing market in 2019, starting with the question everyone is asking: Are we likely to see a downturn similar to the one ten years ago?
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Dennis and Jane and Lee Guertin
(952) 451-4989 Dennis
(952) 451-5217 Jane

2019 Housing Market Update
(Is It Really a Bubble?)

Economists usually predict a correction after a period of expansion, but that doesn't necessarily mean the housing market is due for a big hit.

Here are five key reasons why many housing experts are saying "Now is not like pre-crisis 2006."

1) There Are Far Fewer High-Risk Mortgages

In 2006, leading up to the recession, the mortgage industry issued over $300 billion in subprime loans, according to the Urban Institute. These were packaged into subprime bonds and spread throughout the financial system.

By 2018 the dollar volume of new subprime loans was around $4 billion, a decrease of more than 98%. 

2) Home Equity Debt Is Lower

Outstanding balances on home equity lines are at a 14-year low, according to MarketWatch. Homeowners have more equity available than ever before, but are less likely to use it.

The Scoop on Total Household Debt:

It's slightly higher in volume than in 2006, but has dropped to around 87% of disposable personal income, according to MarketWatch. That's down from around 105% in 2006.

Here's what changed between 2008 and 2018, according to  The Motley Fool:

- Mortgage debt is down 5.6%.
- Personal loan debt is down 10.6%.

- Auto loan debt is up 41.6%.
- Student loan debt is up a whopping 144%.

3) More Homeowners Have a Fixed-Rate Mortgage

Around 40% to 50% of home buyers used an adjustable-rate mortgage (ARM) to purchase a home in 2005 and 2006. In 2018, ARMs accounted for only around 4% of new home loans. This means far fewer homeowners would face financial strain from higher mortgage payments if interest rates increase.

4) Lending Standards Are Much Tighter


The current default risk rate for mortgage loans is around 5.75%, down from over 16% in 2006,
according to the Urban Institute. The median credit score required to qualify for a home loan is around 30 points higher than it was in 2006. 

5) New Home Starts Are Lower

New home construction starts have been rising since their low point in mid-2009, and by 2018 reached a range of around 1,100 to 1,350 per month, according to the Urban Institute.

By comparison, home starts were higher in the mid-1990's, and they continued to rise until their peak of nearly 2,300 in January of 2006. This trend contributed to a massive oversupply of housing when the market weakened.

The Bottom Line

It's easy to find bloggers and housing pundits calling for a repeat of the previous downturn, but the data show us that many of the key factors leading to the 2008 recession no longer exist. (Some housing experts say the public's trepidation about the housing market is just as likely to affect home prices as real economic factors.)

This doesn't mean home prices will never go down again, but it does mean current conditions don't point to a cookie cutter version of the last crisis.

Predictions: What the Experts Say About 2019

Home Prices Are Expected to Go Up

CoreLogic, a data and analytics company, expects home prices to rise 3.4% in 2019. Zillow predicts an increase of 6.3% by October 2019, while is more conservative, at 2.2%.

That being said, many experts predict local price declines in some urban areas that have enjoyed very high price appreciation over the last few years.

Real Estate Closings Are Recovering From the Shutdown

The government shutdown created delays in closings, stopped USDA home loan processing, and caused many federal workers to put off buying a home. The backlog is being worked through now, but would build up again during another shutdown.

Interest Rates and Rents Will Increase

Interest rates, currently in the low 4-percent range, are expected to reach between 5 and 5.8 percent by the end of 2019. Zillow expects rents to start rising again as some would-be home buyers are edged out of qualifying for a mortgage.

People Will Move Inland From Coastal Cities

There's a reason why Idaho has had the highest population growth for two years running (tied with Nevada in 2018). Three-quarters of Idaho's increase came from newcomers, and trend watchers say people are moving to states like Idaho and Nevada to find lower prices, lower property taxes, and a less frantic lifestyle.

What the lawyers make us say: The information here is not presented as expert legal or financial advice. Please use your best judgment and consult professionals when necessary.
Recent Market Highlights

- U.S. home prices rose 6.4 percent year-to-year in November, according to a recent S&P/Case-Shiller report.  They rose 4.7 percent year-to-year in December,  according to CoreLogic, a data and analytics company.

- The national average 30-year fixed mortgage rate is in the low 4-percent range.

The December Pending Home Sales Index decreased 9.8 percent year-to-year, according to the National Association of Realtors®.
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Links that Make Life Easier

Sometimes real estate-related, sometimes not... these are assorted links that come in handy:

2019 Tax Changes: Everything You Need to Know
A helpful explanation of the tax law changes affecting your 2018 tax return.

Everlance Mileage Tracking App
A free app that automatically tracks mileage and lets you swipe left or right to classify the trip as business or personal.

Black Forest Tart Recipe
A surprisingly easy-to-make pie version of the classic cake.

The Lighter Side


When Marine Craig Grossi came across a friendly stray dog while stationed in Afghanistan, he didn't realize it was the start of a lifelong friendship. He eventually smuggled "Fred" home, and later wrote a book about how the dog's companionship helped him recover from a head injury and PTSD. 

Click here or on the image above to get the story on the family-friendly VideoOasis website. (The video is at the bottom of the page.)

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Please give us a call today at (952) 442-1300 if we can be of assistance!
Have a great day,

Dennis and Jane and Lee Guertin
Broker/Owner, REALTOR®, SFR, CBR, e-PRO, GRI, BA
Guertin Family Realty
Dennis:  (952) 451-4989
Jane: (952) 451-5217

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