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Why The Real Estate Market Will Remain Strong in Upcoming Years

Posted by bethdickerson_pksl7a on November 16, 2018
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According to recent news shared by Inman News, the forecast on the real estate market shows  continued strength over the next few years. The Mortgage Banking Association expects the housing market to stay healthy and strong for “at least the next five years” — and maybe even longer.

“The economic backdrop is quite favorable,” the group’s chief economist, Mike Fratantoni, told reporters at the MBA’s annual mid-October convention in Washington.

Fratantoni predicts that mortgage rates will increase to the 5.1% threshold in Q2 of 2019 and remain in that area into the year 2021. According to Freddie Mac, mortgage rates are averaging at 4.9% so we are not too terribly far off from that level.

“Actually, the Fed is still actively trying to stimulate the economy,” he said. But in an effort to keep inflation at bay, he added, the central bank “may shift from neutral into slow-down mode. But I don’t think long-term rates will move nearly as much.”

He anticipates that mortgage rates shall stay low enough to drive home sales from 5.4 million this year to 5.6 next year. We would see 5.7 million in 2020 and 5.8 million in 2021. Powering this increase in sales would be job growth, wage increases and a sizeable pool of young adults who are starting to hit their peak home purchasing years. Fratantoni expects that job growth will slow to a lower pace, but thinks there is enough room for cushion to move things forward at a hearty pace. Meanwhile, unemployment is at an all time low and is expected to remain low next year as well.

One of his big points is that millennials are now entering their prime home buying years between the ages of 25 and 40 and are adding to the demand for housing needs. The pool of first time buyers has been continuously surging which will add more steam to the market.

“Demand is there, mortgage rates will go up but not too much, the economy is strong and housing starts are gaining steam,” Fratantoni said. “This is what’s driving home buying.”

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  • Beth Dickerson

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