Experts predict that consumer house-buying power could rise to new heights in 2019. There are three crucial factors driving that prediction.
The first one is the declining home prices. According to First American’s Real House Price Index, home prices fell 0.7% in May, declining 3.7% over the years. Historically, a decline in prices has allowed more people to make home purchases.
The second factor is a possible rate cut. According to experts, the Federal Open Market Committee will likely announce a rate cut. A rate cut in federal funds doesn't directly influence mortgage rates, however, it will increase demand for long-term Treasury bonds, which affects mortgage rates closely.
The fixed-mortgage rate has the greatest impact on consumer house-buying power. According to Fleming, house-buying power could increase from $410,000 to $414,000, if the fixed-rate mortgage declines from its current level of 3.8% to the expected level of 3.7% in the third quarter of 2019. Fleming predicts that fixed-mortgage rate will decline to an average of 3.9% in 2019.
Buyers will want to pay a close attention to shifts in both global and local markets in order to get the best price for their future home or investment.