Three Residential Real Estate Investment Predictions for 2019

The year is quickly winding down with holiday activities and gift buying on everyone’s mind. For the real estate investor, this is the perfect time to reflect on the accomplishments and lessons learned this year to make 2019 a tremendous success.

The real estate story of the year has been the reduced supply of homes which has caused prices to increase­­. A big positive when selling a home, higher home prices can squeeze profits while making it harder and more time consuming to find attractive fix-and-flip projects. With the new year rapidly approaching, the following are a few key trends and indicators to watch in 2019:

  1. Interest Rates

    The Federal Reserve recently raised interest rates for the fourth time in 2018 and, despite a volatile stock market, many believe at least two more rate increases are likely in the coming year. The 30-year fixed-rate mortgage is likely to reach 5.3% (versus 4.7% in 2018) with the 15-year fixed-rate mortgage increasing to 4.7%. Even with these increases, it is important to remember that interest rates remain near historic lows.

From an investment standpoint, rate hikes have little impact when using a fix-and-flip loan to finance a short-term project or to finance your rental property. Instead, the difference will be felt by the longer-term home owner looking to payoff the property over time.

  1. Home Prices

    Home prices will stabilize in 2019 and the frenzied activity of multiple bids and houses selling in three days will subside. This activity previously drove up real estate prices but should settle to provide a steadier market. The demand and supply across sellers and buyers should even out as the California Association of Realtors is predicting that home prices will increase 3.1% in 2019 after experiencing 7% growth this year.

  1. Markets to Watch

The top 10 real estate markets to watch in 2019 are:   

  • Dallas/Fort Worth, TX
  • Brooklyn, NY
  • Raleigh-Durham, NC
  • Orlando, FL
  • Nashville, TN
  • Austin, TX
  • Boston, MA
  • Denver, CO
  • Charlotte, NC
  • Tampa, FL

Many of these markets make the list as they offer:

  1. Low cost of living
  2. Low cost of doing business
  3. Tax advantages
  4. Population growth projected to exceed the 2019 national average

If your area is not listed in the top 10, don’t be discouraged. Forbes recently highlighted 25 hot markets for real estate investment and there are pockets of opportunity in almost every market across the country.

Skills to be Leveraged in 2019

No matter the year, the market always changes and 2019 will prove that once again. Real estate investors are some of the most creative and entrepreneurial people so leverage your skills and strengths to help you not only survive but thrive in the coming year. A few skills to keep top of mind in 2019:

  • Be creative. If you have a tenant that is looking to buy the property but is wrestling with higher interest rates, sweeten the pot by offering one month of rent free if they buy. For new buyers looking to purchase your flip, offer to pay closing costs to get a deal done faster. Create immediate incentives to close the tenant or buyer on the fence quickly.
  • Observe local tastes and trends. Watch the current housing market closely and work with a local realtor if necessary to gather feedback on current tastes. Nothing moves a house faster than a quality rehab that fits the neighborhood’s style. Leverage extras such as offering window blinds or other tasteful finishing touches to seal the deal.
  • Set goals and manage projects closely. With home prices stable but not operating in a seller’s market, it is more important than ever to move quickly while professionally executing your renovation plans. Time delays and budget overruns can be exceptionally costly when there is less wiggle room in the market. Know your dream, set goals, take action, and execute your plan. Generating wealth is possible in any market through smart investing and world class execution. Provide future home owners with the home of their dreams while following your dream of independence, wealth, calling the shots, or whatever is most important to you.    

To get a fix-and-flip or rental property loan funded leveraging a quick and efficient process, contact Center Street Lending at 800.208.2976. Our experienced team looks forward to helping you reach your investment goals while helping ensure a successful 2019!