Similar as to how political pundits claim that this election cycle will be the most important in a generation, this year could be the most important year in recent memory in terms of mortgage loans and the residential real estate industry at large. (And if you believe that I have some swap land in Florida I'd like to sell you). For a variety of reasons, I have decided unilaterally to keep it short and sweet this year. Hence, here are the three perennial predictions for 2019.
1. Gig Work.
At first glance, the phrase "Gig Work" seems antithetical to sound mortgage underwriting standards, but it is in fact actually very refreshing. And that is to say that as the aftermath of the 2008 crash could not be further from the subconscious, there perhaps is subprime "creep" into present underwriting standards. But this is not your Daddy's Oldsmobile underwriting standards. Meaning, that lenders today are more than willing to count part-time and intermittent work as bonifide income, even though it had been looked down upon post-2008.
According to Saideh Brown, President Emeritus of the National Council of Women at the United Nations, "Mortgage lenders are beginning to factor in gig-work for mortgage approval. This is only going to become more prevalent with the current job market. Banks are looking into all sources of income and gig-work is quickly becoming a primary source of income for millennials and must be factored in to get an emotional buy-in to homeownership from this generational block. "
Thus, the bottomline for 2019 on Prediction 1, expect creative – yet reasonable underwriting standards to become apart of normal mortgage underwriting procedures.
2. Saved by the Millennials (again). Whaaat ??
At second glance, who isn't bored by the self-absorbed Millennials. Me for one, but not withstanding that tongue and cheek denigrative response to the flavor of the month generation – who will undoubtedly be replaced by the next off-spring of eternal hopefulless, they do at least make for good print. And here's the angle; While many are concerned if real estate is a safe bet today, then historically speaking it is – and thus, one's perspective should be long term, despite the naysayers on non-real estate appreciation for 2019.
According to Dan Green, CEO of real estate site Growella, "Rising mortgage rates aren't slowing the Millennial Generation's desire for homeownership. Pent-up demand will continue to unfurl through 2019, moving home values up across all price points. Like all markets , housing is defined by supply and demand. And, so long as supply and demand remain within tolerable ranges, housing will continue to be a good investment. "
Thus, the bottomline for 2019 on Prediction 2, buy now and forever hold your peace, since interest rates are still good.
3. Home price decline.
Real estate has always been local. Hence, the adage "Location, location, location." With that in mind, there is nothing to catastrophically fret about in terms of buying a home as a primary home. If you're an investor, then pick your fights carefully, since not all markets will perform as anticipated no matter how smart you may think you are! With that in mind (again), there will be a slight degree of variability – as there sound be, since it would be insanely moronically not to expect some degree of variability. Even in the Garden of Eve, market value likely dipped in price after Adam bit into the apple.
According to Ruben Gonzales, Chief Economist at Keller Williams, "As we look toward 2019, we are anticipating home sales to decline around 2%. We're expecting it to be another slightly slower year as buyers continue to wrangle with higher mortgage rates after contending with several years of rapid price growth. "
Thus, the bottomline for 2019 on Prediction 3, proceed with caution as an investor, but as a primary homebuyer nothing should reasonable caution you from a buying decision, since home appreciation should be an afterthought, and especially so depending upon your hold period.