Okay, 2018 was quite the tease in the housing market. The year started out hot, only to taper off halfway through. But plenty of Americans still traded their For Sale signs for Sold ones, and they鈥檒l usher in the new year from the comfort of their new homes. So will 2019 bring more of the same results? How will the housing market shake out in the current economic climate?

Whether you鈥檙e selling, buying or staying put, here are the 2019 real estate trends you need to know!

Real Estate Trend #1: Home Prices Are Rising Slowly . . . With Less Offers

Unless you鈥檝e been living under a rock, you鈥檝e heard that during the course of 2017 and early 2018, home prices made a giant 10% jump. Wow! This year, however, may be a different story. Home prices are estimated to rise in 2019, but at a much slower pace, and the number of homes for sale is expected to increase by a mere 1%.

What鈥檚 the reason? Well, part of the slowdown is due to increased mortgage interest rates and another part is because of overall economic uncertainty. That combination is enough to discourage many buyers who are on the fence about purchasing a home.

But there are still eager buyers in the market, and many of them are looking for newly built homes. In fact, new home construction is projected to increase by 8% in 2019. That鈥檚 the good news. Here鈥檚 the bad news: There just aren鈥檛 enough new homes to go around in some areas. Plus, construction companies also don鈥檛 have the manpower to keep up with demand.

What鈥檚 the bottom line? Expect the new construction that is available to go for a higher price.

What Higher Prices Mean for Sellers

A nice profit may be on the horizon! The number of homes sold next year is still expected to rise, even if it鈥檚 at a slow pace. That鈥檚 great news for sellers! But keep in mind that a lot of buyers are being priced out of the market, which could lead to fewer offers for your home.

So what should you do about this? Be aware of your competition. With less offers to go around, you want your home to really stand out from similar ones in your area. Prepare your home for potential home buyers and work with a real estate agent to help you list your home at the right price.

And be sure to wait for the right offer. Some buyers may try to gut punch you with a low number. If you aren鈥檛 in a hurry to move, wait for an offer that gives you the most profit. Remember, the less desperate person always has the upper hand when negotiating!

What Higher Prices Mean for Buyers

If you鈥檙e going to buy a home in this expensive market, you absolutely must find out how much house you can really afford. Crunch the numbers yourself with our free mortgage calculator and figure out a monthly payment your budget can handle.

Commit to staying within that budget amount. Don鈥檛 rush into a home purchase that doesn鈥檛 make financial sense for you no matter how much pressure you feel watching competitors pluck good homes off the market. You could screw up your finances!

If you can鈥檛 put down at least 10% on a 15-year fixed-rate conventional loan, then you probably can鈥檛 afford a house in this market. A down payment that鈥檚 less than 10% will strangle your budget with massive monthly mortgage payments. But if you want to get prepared to buy and you鈥檙e committed to your budget, here are some options to consider:

Keep saving. If you stay patient and motivated, you can save for a five-figure down payment by this time next year.

Sacrifice some wants. If you can鈥檛 afford to buy the house you want, be willing to give up some 鈥渘ice-to-haves鈥 for your 鈥渕ust-haves.鈥 Find the least expensive home in the best neighborhood you can afford and you can upgrade as your income and savings increase over time.

Expand your search. What if the location where you鈥檙e planning to buy is what鈥檚 busting your budget? You might be surprised at the gem you can find in a less popular neighborhood. Getting connected with a real estate agent who really knows the area is the best way find a home that fits your budget and lifestyle.

Buying a home can be stressful, but our Home-Buyer鈥檚 Guide will streamline the process! It鈥檒l help you think through all the important parts so you can rest easy when your dream home is officially yours.

Real Estate Trend #2: Mortgage Interest Rates Are on the Rise

Call it the seven-year itch. Mortgage interest rates are on the rise after years of being at a standstill. Interest rates are projected to increase to an average of 5% for a 30-year mortgage and 4.4% for a 15-year mortgage (the only type of mortgage we recommend).(3)

Mortgage interest rates are on the rise after years of being at a standstill. Interest rates are projected to increase to an average of 5% for a 30-year mortgage and 4.4% for a 15-year mortgage.

It鈥檚 been seven years since mortgage rates were this high. But despite grumblings, that doesn鈥檛 mean the economy is in trouble. It actually means the opposite! To help stabilize the strong economy and rising inflation during the past few years, the Federal Reserve increased short-term interest rates. It鈥檚 somewhat natural to see a trickle-down effect to the bank level like what we鈥檙e seeing now with mortgage interest rates.

The increase basically means more people are willing to spend and borrow. Still, expect things to be a little different next year as buyers and sellers adjust to these changes.

What Higher Mortgage Interest Rates Mean for Sellers

In a nutshell, plan for your house to be on the market a little longer and prepare to possibly receive fewer offers. A mortgage is a big commitment, and adding higher interest rates to the mix will make many buyers pause. Partner with a real estate agent who understands the current market. They鈥檒l help you set expectations for how much you can make, and how long you鈥檒l have to wait for the right offer.

What Higher Mortgage Interest Rates Mean for Buyers

Even though mortgage interest rates are the highest they鈥檝e been in a while, they鈥檙e still relatively low. If you鈥檙e not buying with cash, be smart and go for a conventional 15-year fixed-rate mortgage. That way, you know exactly what your payment will be over the life of the loan.

Real Estate Trend #3: The Majority of Home Buyers Are Millennials

Move aside, baby boomers and Gen Xers! Guess who鈥檚 taking the over the homeowner leaderboard? Yep, you better believe it. Millennials are busting out all over. They鈥檙e getting older and finding stable careers. Their household income has increased to $88,200, and they鈥檙e looking to buy their first homes in middle and upper-middle class neighborhoods.(4)

This works out perfectly for them as more baby boomers are retiring and downsizing. Next year, millennials will lead the way in number of mortgages, accounting for 45% of the market. They鈥檒l be followed by Gen Xers at 37% and baby boomers at 17%.(5)

In 2019, millennials will lead the way in number of mortgages, accounting for 45% of the market. They鈥檒l be followed by Gen Xers at 37% and baby boomers at 17%.

What More Millennial Home Buyers Means for Sellers

Here are three important words: Know your buyer. Millennials are internet savvy and do their research before house shopping. They look for:

Easy online shopping. The home search starts online for millennials, so you need to make the best possible impression on the internet. Make sure you invest in high quality photos, and, for extra measure, consider using a drone to take aerial video footage.

Quality over size. Yes, square footage matters. But millennials are more concerned about how sustainable and usable each space is. Get rid of your junk so they can visualize a bright future in your home without your stuff there.

Location. A lot of millennials are looking for homes in 18-hour cities like Nashville, Tennessee, or Austin, Texas, that offer big city life at a more affordable cost of living. If your home is in a walkable area with access to public transit, expect millennials to come knocking at your door.

Low-maintenance lifestyle. Millennials are used to living in the age of high-tech advances and Amazon Prime. They鈥檙e looking for energy-efficient homes with smart appliances. If you don鈥檛 have them, they鈥檒l look elsewhere or lower their offer so they can upgrade after they buy.

What More Millennial Home Buyers Means for Buyers

Okay, if you鈥檙e looking for a three-bedroom, single-family home in the suburbs, expect to have a lot of competition. You may have to reprioritize what you want in a dream home. Follow these tips:

Know what you want. Decide what you absolutely need in a home. If you鈥檙e married and house hunting, you and your spouse need to agree on must-haves. Compare your individual lists and combine them for your real estate agent to use as the foundation of your home search.

Write a letter. Sending a personal story to your seller might be just the thing that makes you stand out from similar offers. Nashville couple Abby and John included a personal letter when they made an offer on their home. 鈥淲e sent the sellers a personal letter with our offer,鈥 Abby said. 鈥淭he best thing you can do is to include in the letter things you love about their house. If they have a deck or screened-in porch, tell them how you envision using the space. We did that and the sellers accepted our offer鈥攐ut of multiple offers鈥攚ithin 24 hours.鈥

Hire an experienced pro. Last year, 90% of millennial home buyers used real estate agents to purchase their homes.(6) Think they鈥檙e onto something? You bet! Don鈥檛 try to buy on your own. Get the help of a pro so the home-buying process is smooth for everyone involved.

What If I鈥檓 Not Buying or Selling a Home This Year?
You may be thinking, All this is great, but I鈥檓 not going anywhere anytime soon. We hear you, and here鈥檚 what you should know for now:

1. Equity will likely continue to increase by 2鈥6% each year until 2020.

With most housing markets at low risk for a downturn, the 2018 Housing and Mortgage Market Review estimates home prices will continue to rise for the next couple of years, with annual increases of 2鈥6%.(7) Who-hoo for sellers! If you sell your house before 2020, you鈥檒l likely still make a great profit. Continue to monitor how much your home is worth to make sure your equity (what your home is worth minus how much you owe on it) is going up.

2. From what we can see, the real estate market is not going to crash.

With such fast-rising mortgage interest rates, some folks are wondering if the housing market could collapse again. Well, it鈥檚 impossible to know for sure, but a number of factors indicate a housing crash is not in the foreseeable future and the economy is still strong. Here are some indicators:

People are spending money.

There鈥檚 a low unemployment rate and new career opportunities.
All-cash real estate buyers (our kind of people!) are becoming more common.
Fewer buyers are using interest-only home loans (aka the worst loans possible) that allow you to pay just the interest each month and not the principal.
Millennials want to buy.
Taxes are lower.
3. Regardless of your neighborhood, buyers are interested.

Even though buyers in 2019 may be choosy, determined ones might be willing to consider neighborhoods that don鈥檛 have easy access to highways or aren鈥檛 in close proximity to a big city. If you think you live in an unpopular neighborhood or believe your home isn鈥檛 what buyers are looking for, think again. Now may be your perfect time to sell.