U.S. Real Estate Market Trends & Projections For 2019

The US Real Estate Market is constantly changing and evolving, as does the opportunities it brings. Whether you are a real estate professional, new or seasoned investor or a potential homeowner, the following US map and market analysis will help you better understand the current landscape. Click on a state below to get started!

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Key Takeaways

  • The U.S. real estate market is better off than it has been in recent history, but there is still plenty of room for improvement.
  • Many of the most prominent U.S. real estate trends look to be working in favor of investors.
  • The U.S. housing market needs to pick up the slack in a few key indicators to truly realize its potential.

The U.S. real estate market began 2019 with the intention of answering several important questions: Will inventory rise enough to satiate demand? Will the Fed feel confident enough in the economy to continue increasing interest rates? Will homes continue to appreciate at their current rate? Perhaps even more importantly, do today’s U.S. real estate market trends suggest the market is on a good trajectory?

All of these questions, and many more just like them, have fueled a great deal of uncertainty within the U.S. housing market for far too long. It is worth noting, however, that the market is much more stable than many people realize. In fact, it is safe to assume things are heading in a direction that most people can feel comfortable with. There is considerable reason for optimism in many of the country’s markets.

“The housing market is doing fine,” said Lawrence Yun, Chief Economist for the National Association of Realtors. “But it certainly can do better given what’s happening with job creation and the historically low mortgage rate that is currently in place.”

Despite Yun’s optimism, the American real estate market has plenty of room for improvement. At the moment, there are several obstacles that need to be overcome in order for the national real estate market to live up to its potential, which begs the question: What does the current state of the American housing market mean for today’s investors? What does the real estate investing landscape look like for investors across the country, now and for the foreseeable future?


Real Estate Market Overview

The U.S. housing market is currently highlighted by a unique combination of fundamental indicators. For starters, the market is on much sturdier ground today than it has been in recent history. Most importantly, the economy is better off than in years past, which has enabled more prospective buyers to actively participate in the market. That said, buying in today’s market may be easier said than done.

At the very least, the market currently leans very heavily in favor of sellers. Due, in large part, to a distinct lack of inventory and the market’s inability to satiate demand, prices have continued to march upwards, to the point that they are prohibiting many buyers from actually participating. Prices are simply too high, even for those who are in the market to buy.

Consequently, inventory remains low, as sellers are not too fond of the idea of becoming buyers themselves. According to the National Association of Realtors (NAR), “total housing inventory at the end of July decreased to 1.89M, down from 1.92M existing homes available for sale in June and from a year ago.” At the current sales pace, the latest inventory data suggests the U.S. real estate market now has about a 4.2-month supply, which is slightly less than a balanced market would like to see.

Make no mistake, however, as confidence in the American housing market is on the mend. According to the NAR, the latest Realtors Confidence Index Survey identified an overwhelmingly positive sentiment. The “Six-Month Outlook Current Conditions registered at 59 for detached single-family, 49 for townhome, and 47 for condominium properties. An index above 50 indicates market conditions are expected to improve,” according to the NAR survey. Not only that, but interest rates (while on the rise) remain historically low.

Improving sentiment and relatively low interest rates have combined to create a more welcoming real estate market than in years past. As a result, existing home sales grew 2.5% from June to a seasonally adjusted rate of 5.42M. “Overall sales are up 0.6% from a year ago,” according to the NAR.

The Top U.S. Real Estate Markets

Real estate is incredibly local, and every market exhibits inherently unique fundamentals. The health of the local job sector, foreclosure rates, housing inventory, and a number of other fundamentals are all relative to each state’s current position. Consequently, the criteria used to define a “top” real estate market are almost entirely dependent on the individual looking to invest. After all, what one investor may be quick to write off, another may covet. That said, there’s one objective indicator real estate investors must account for each and every time they evaluate a market’s potential: opportunity. A truly great real estate market is capable of granting investors the ability to, well, invest.

While price, inventory, demand, and competition are all of the utmost important factors to consider in a given market, they all mean nothing if there are zero opportunities. As a result, investors will want to place the odds in their favor and set up shop in states where they are most likely to land a deal. However, it’s not just opportunity that sets great markets apart; opportunity needs to be complemented with attractive profit margins.

Here’s a list of some of the top U.S. real estate markets for investors to consider in 2019:

  • Florida: With a foreclosure rate of 0.39%, the Florida real estate market had one of the nation’s highest distributions of distressed properties through the first six months of the year. In fact, Florida was home to four of the top five markets with the greatest annual increase in foreclosure starts over the first six months of 2019: Orlando, Jacksonville, Miami and Tampa Bay. The sheer volume of distressed properties in Florida bodes well for real estate investors looking to acquire deals at a discount.

  • Pennsylvania: While the foreclosure rate isn’t nearly as high as Florida (1 in every 2,458), Pennsylvania awards patient investors with another unique opportunity: attractive returns. Three of the eleven markets in which investors were able to double their return on investment (ROI) in the first quarter of this year were in Pennsylvania: Pittsburgh (131.2%), Scranton (112.0%), and Philadelphia (100.0%).

  • Tennessee: The Tennessee real estate market has experienced a bit of a resurgence in 2019. As a result, the distribution of distressed properties in Tennessee is considerably lower than the first two states on this list ( 1 in every 3,961). Despite the lack of distressed homes, however, two of Tennessee’s largest markets saw investors double their ROI: Knoxville (105.0%) and Memphis (79.2%). In fact, Memphis was so attractive to investors that it boasted the nation’s highest flipping rate in the first quarter of this year.

  • New Jersey: New Jersey boasts the worst foreclosure rate in the entire country, with one in every 1,173 units facing some form of distress. Therefore, it’s reasonable to assume investors should have an easier time finding motivated sellers in The Garden State. Atlantic City, in particular, appears ripe with opportunity for investors, as one in every 666 housing units is currently distressed, making it the worst metropolitan foreclosure rate in the entire country. Despite the rampant foreclosure rate, however, no other city saw a larger appreciation rate than Atlantic City in the second quarter of this year (16%).

  • Ohio: With a foreclosure rate of 0.30%, Ohio was recognized as one of the states with the highest foreclosure rates in the first half of 2019. However, two of Ohio’s biggest cities (Columbus and Cleveland) offer today’s investors some great opportunities. Columbus, for example, saw median home values appreciate by as much as 8.1% in the second quarter of 2019. Investors in Cleveland, on the other hand, saw the average return on investment reach 100.0% in the first quarter of this year.

U.S. Housing Market Overview

  • Median Home Value: $229,000
  • 1-Year Appreciation Rate: 5.2%
  • 1-Year Appreciation Forecast: 2.2%
  • Median List Price Per Square Foot: $156
  • Median Listing Price: $289,900
  • Median Sold Price: $235,500
  • Median Rent Price: $1,735
  • Percent Of Homes With Negative Equity: 8.2%
  • Listings With Price Cuts: 17.5%
  • Average Days On Market: 29
  • Percent Of First-Time Buyers: 32%
  • Percent Of Vacation & Investment Buyers: 11%
  • Percent Of Cash Sales: 19%
  • Months Of Inventory: 4.2
  • Total Housing Inventory: 1.89M

Median Home Prices in the U.S.

At its lowest point of the latest recession (around March 2012), the median home value in the United States bottomed out at approximately $148,000. Since then, several indicators have combined to boost values across the country. Namely, an improved economy, increased demand, and a lack of available inventory have all served to increase the median home value in the United States for seven consecutive years. In the last year (alone), the median home value increased 5.2%, which has helped prices get to where they are today: $229,000.

The entire U.S. real estate market is in nothing less than a hot seller’s market. With the way things are currently going, it’s reasonable to expect prices to increase for the foreseeable future, albeit at a slower rate. In fact, appreciation rates may struggle to reach even half of what they were last year. With prices now at historic highs, Zillow is forecasting a 2.2% increase over the course of the next 12 months.

The tempered forecast isn’t necessarily an indictment on the U.S. real estate market as a whole, but rather a sign that things may be returning to “normal.” If for nothing else, prices have inched higher and higher for quite a while, effectively pricing many prospective buyers out of the market. With news of the tempered increases, more buyers may finally be able to actively participate in the market, which bodes well for just about everyone in the industry, including real estate investors in every state.

Median Rent Prices in the U.S.

According to Zillow, the median rent price in the United States is $1,735. Not surprisingly, however, two-bedroom and one-bedroom units are going for less, $1,191 and $960 respectively. At their current level, national rents have increased 1.6% year-over-year. Despite the increase, growth in rates remain modest compared to previous years (especially from 2014 to 2017, when year-over-year increases reached as high as 3.6%).

The rate in which today’s rents are increasing lags slightly behind the overall rate of inflation. Perhaps even more importantly, rent increases trail behind the growth in average hourly earnings, which have increased by 3.2 percent over the past twelve months. As a result, renters should find renting more affordable, which bodes well for both tenants and landlords. Passive income real estate investors should find vacancies slightly harder to come by when their properties are more affordable to the average renter.

Several markets have been experiencing larger than average increases in rental rates. Henderson, NV, in particular, owns the nation’s fast rent growth over the course of the last year. With an increase of 4.7% over the last 12 months, Henderson’s year-over-year rent growth has nearly tripled the national average. Other cities with higher than average rent increases include:

  • Mesa, AZ: 4.4%
  • Las Vegas, NV: 3.9%
  • Phoenix, AZ: 3.7%

Foreclosure Trends & Statistics

The U.S. real estate market has seen its foreclosure filing rate decrease for the better part of a decade. Since 2010 (when foreclosure filings were at their most recent peak), the number of homes that have entered into the foreclosure process in the first half of the year has declined for the ninth consecutive year. With 296,458 foreclosure starts through the first half of 2019, the number of foreclosure filings initiated through the first half of the year has dropped 18% from the same time last year, and a staggering 82% from their high of 1,654,634 in the first six months of 2010. There’s no doubt about it: nearly ten years of data confirms that the number of homes entering into foreclosure in the first six months of the year has declined dramatically with each passing year.

The precipitous decline in foreclosure activity over the last decade has alleviated a great deal of pressure facing states with relatively high foreclosure rates. For years, in fact, many states were overburdened with an influx of foreclosures following the last downturn; there were simply too many distressed homes for the courts to process, and a backlog developed overtime. However, the recent decline in foreclosure filings has allowed once backlogged states to process more of their foreclosures, and faster nonetheless.

Halfway through 2019, the foreclosure process (from notice to completion) took an average of 716 days; that’s four days less than the same time last year, but 119 days shorter than the first quarter of this year. The states with the shortest foreclosure timelines were:

  • Mississippi: 195 days
  • Minnesota: 226 days
  • Virginia: 228 days
  • Alaska: 242 days
  • Maine: 277 days

There are several states with considerably higher foreclosure timelines. Due, in large part, to higher rates and more “red tape” surrounding the process, foreclosure timelines are longest in the following states:

  • Hawaii: 1,611 days
  • Indiana: 1,360 days
  • Florida: 1,073 days
  • New York: 1,057 days
  • New Jersey: 982 days

“Of course, you still have pockets across the nation where foreclosure activity is seeing some flare-ups,” said Todd Teta, chief product officer at ATTOM Data Solutions.

Despite the downward trend in foreclosure filings on the national level, some states have seen increases in foreclosure acuity. Florida, in particular, boasts several cities with some of the worst foreclosure rates in the country: Jacksonville, Orlando, Tampa Bay, and Daytona Beach.

According to data presented by RealtyTrac, the overwhelming majority of distressed homes across the country are either up for auction, or will be at some point in the near future. In fact, 47.3% of the nation’s distressed homes (according to RealtyTrac) have already been repossessed by their loan originators and are expected to be sold at auction. The remaining distressed homes are split between pre-foreclosures and bank-owned homes, 31.0% and 21.7% respectively.

U.S. Housing Market Projections

Forecasting the U.S. real estate market without an inherent degree of error is a fool’s errand. There is no crystal ball that can predict U.S. real estate market trends. However, it is entirely possible to read into trends and extrapolate data to make an educated guess. That said, it’s pretty safe to assume the following U.S. housing market projections will come true in the near future:

  • Prices Will Continue To Rise: The median home value in the United States has risen for seven consecutive years. Today’s median home value is approximately $80,000 higher than where it was at the depths of the recession in 2012. There’s nothing to suggest the trend won’t continue, too. While the national rate of appreciation is expected to temper slightly, home values will continue to increase, to the tune of about 2.2% over the next 12 months. Homes will become slightly more affordable relative to the previous year’s rate of appreciation, but limited inventory levels will continue to drive up prices, albeit at a tempered rate.

  • The Next Generation Will Join Millennial Buyers: Millennials have solidified themselves as the most active homebuyers in recent history. However, the tempering of appreciation rates should increase the number of first-time homebuyers who can actually afford to participate in the market; that means a great deal of buyers from Generation Z may be ready to participate in the market. The market has already seen an influx of buyers from Generation Z, but the rest of 2019 should see even more trying to take advantage of today’s great interest rates. According to a TransUnion report, the number of Generation Z consumers with a mortgage rose by 112% from the second quarter of last year to the second quarter of this year.

  • Interest Rates Will Remain Relatively Low: As the economy continues to demonstrate that it is capable of improving even further, the Fed feels compelled to increase interest rates accordingly. In fact, interest rates have been rising slightly for a couple of years now; that is, until the end of last year. Despite already being relatively low, interest rates started dropping (yet again) in December 2018, and now sit at a very attractive 3.77%.

  • Secondary Cities Will See An Influx Of First-Time Buyers: Today’s median home value has surpassed pre-recession peaks, and is now higher than it has ever been in the last seven years. Primary cities, as a result, may be out of the price range of today’s largest buyer pool: Millennials. Therefore, it’s safe to assume many first-time buyers will elect to forego the high prices of many primary cities in exchange for the affordability of their nearby, slightly cheaper counterparts.

Again, there is absolutely no guarantee these predictions will come true, but today’s real estate investors who can interpret trends correctly may be able to position themselves for success in the coming months.

Summary

The U.S. real estate market is better off today than it has been in recent history. While fears of a recession are on the minds of many, it’s important to remember that there are several fundamental differences between now and a decade ago. Lending practices and underwriting strategies, in particular, are a lot stricter, as to prevent a repeat of past transgressions. Despite the improvements, however, the American real estate market boasts countless opportunities for real estate entrepreneurs looking to make a career out of investing. With the right systems in place, there’s absolutely no reason anyone shouldn’t be able to realize success as an investor in the U.S. housing market.

Have you thought about investing in the U.S. real estate market? If so, what are you waiting for? We would love to know your thoughts on the current state of the American real estate market.

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either expressed or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.