As I write this article, 2018 is coming to an end, and I am reflecting on all that has come to pass, I cannot help but look forward to a new year and a new adventure. I know everyone had his or her own unique experience this past year. Friends’ stories range from “this was the best year of my life” to “I cannot wait to turn the page and start anew in 2019.” I myself endured the most physically painful months of my life, culminating in having two discs replaced in my neck. Even this trial, I look on as a picture of the collective overall experience. No matter the circumstance, you can depend on change. No matter the pain, good things will emerge. Even things that seem to start quickly can ultimately lead to a slow down before a full recovery.
We have seen the economy soar this year, only to slow toward the end due to repeated interest rate hikes, elections, new trade agreements and trade battles. The stock market has been quite volatile in the last quarter, due to geo-political uncertainty, financial manipulations by the FED, and ultimately fears of a slowdown in 2019 forcing a pulling away from riskier stocks. Unemployment remained very low as predicted, leading almost to a feeling of full employment. Gross Domestic Product steadily increased at a very healthy rate. New construction increased but the high cost of construction, coupled with interest rate hikes, slowed new single family home starts, while at the same time, the volatile multi-family industry managed to increase by 10.3%, according to Kiplinger’s.
Between doctor appointments and surgery, I managed to sell a lot of homes and lease many properties, but the way that looked in the first half of the year was quite different than the way that things developed in the latter part of 2018. Early on, we were still in a hot seller’s market. Properties hit the MLS and soon after, multiple offers flowed in. By the end of the year the average days on market grew significantly, and while the sale prices were not substantially affected, the way that homes were marketed and ultimately negotiated was quite different.
According to the National Association of Realtors (NAR), 2017 hit a 10-year high with 5.51 million sales, and 2018 was down just about 1.5% to about 5.35 million, most of which happened in the first two quarters, with noticeable slowing in the third quarter and a slight rebound in Q4. Overall inventory remains low in both the sale and leasing markets, but with near full employment, interest rates on the rise, and the stock market’s volatility, many potential buyers and renters are staying put. They are not a quick to jump into the market, nor are they as quick to move to a new rental.
This doesn’t mean that the housing market is in trouble by any means. It does mean that the home must be right, the price must be right, and the terms must be right in order to entice them. NAR predicts that the total sales in 2019 will increase slightly to 5.4 million (about 1%). I’m telling you that sellers should expect significantly longer days on market next year, and should plan to make sure their home is well marketed. This means staging the home, and upgrades and repairs being completed prior to sale, but it also means choosing an agent that understands the changing market and then listening to their trusted advice.
Quite frankly, I am not easily surprised by anything anymore. That may be a result of too much too fast, desensitizing me. Or maybe it is the media trying to fuel a constant state of anxiety in order to fill their 24-hour news cycle, or the general sense of incivility in our culture, or the fact that the old body is breaking down faster than I anticipated, I don’t know.
No matter the reason, I am liberated by it. I don’t constantly live in a state of shock, and I think this allows me to develop some perspective. For instance, I am not too worried about interest rate hikes. They promote savings, most economists agree that they are needed to maintain a healthy economy, and they are still at historic lows when it comes to home purchases. I refuse to let a challenging sales market create a sense of dread for 2019. Folks in the real estate business, like me, will have to step up our game to help our clients grab their dreams and make them realities.
If Americans are working, they are buying goods and services, and moving themselves and their families down the road to success. Oh, here’s a news flash: the stock market goes up and down. In fact, whether the market is at 22,000 or 26,000 makes little difference to me on a day-to-day basis. I do like to watch overall trends, and so here is my prediction for 2019, based on the trends I am seeing.
Everything is going to be OK. We are going to sell just about the same number of homes as we did last year, albeit with a more flattened appreciation increase. Homes are going to stay on the market a little longer, but they will sell. Your rental price increases will slow significantly, but that’s ok too, because the vacancy rate will remain low.
Overall, the economy will continue to grow next year, and unemployment will remain low, if not decrease. While I have stated that I am not easily surprised, I don’t want you to be surprised either. Especially if you see me more this year … because I am finally rid of this pain in the neck and I am looking forward to getting after it in 2019.
Eric P. Hoglund, RMP, SRES, GRI, is a Broker Associate at Estey Real Estate, 216 First Street.
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