While real estate is a lucrative business, there will certainly be drawbacks from time to time. The real estate industry is truly a risky endeavor for both buyers and sellers with the different factors that can greatly affect it.
There are already common and basic challenges to selling a house, but major problems also present themselves as time goes by. Already, 2019 seems like it will be a tough one for sellers with increasing taxes, climate change and laws and restrictions. Here are the challenges of house-selling in 2019.
Increasing Rates And Prices
Realtor.com’s 2019 housing forecast is out and according to it, rates and prices all over the United States will increase this year. This will undoubtedly affect the real estate industry, especially real estate agents and ordinary homeowners looking to sell their houses.
Mortgage rates are predicted to increase from 5.3% to 5.5% by the end of the year, while monthly mortgage payments will increase by 8%. Apart from that, house prices will also rise in most of the largest metros in the country, with Grand Rapids and Wyoming in Michigan having the highest price increase at 8.2%.
Selling houses to millennial first-time homebuyers will be a taxing task, as they may struggle in this situation where house prices are high and mortgage rates continue to increase.
Sustainability In Houses
As the world faces multiple natural disasters and the imminent threat of climate change, more and more states and communities are aiming for sustainability in houses. Authorities are setting up energy regulations and policies and overseeing sustainability efforts, all to prepare for the ever-changing environmental conditions.
This can pose a problem to real estate developers, real estate agents and even regular citizens who are renovating and will be selling their properties. This could slow down projects and individual house construction. It also creates more legal problems in the process of selling a house.
Possible New Immigration Restrictions
The Reforming American Immigration for a Strong Economy Act (RAISE Act), which was first introduced in 2017, would make changes in our country, and that includes the real estate industry.
The bill would lower the number of green cards issued to 500,000 annually from 1.1 million — about half the current number. There would also be a 50,000 limit per year for refugees given permanent resident status. With these new immigration restrictions, real estate would also be greatly affected. Real estate agents and house-sellers would surely experience some setbacks.
The Rise Of E-Commerce
The rise of e-commerce — online business and retailers — could pose a challenge to real estate in 2019 as well. The U.S. Department of Commerce estimates that online retail sales generated $127 billion in retail sales in the second quarter of 2018. While this may seem like an achievement (and it is), this is a serious concern for those who have physical stores and those who rely on buildings and infrastructures. Therefore, it is a concern for those who are in the real estate business as well. Selling commercial properties and residential-commercial properties to business owners or entrepreneurs in a situation like this could be challenging.
A Decline In Active Buyers
And perhaps the most daunting challenge of house-selling in 2019 could be the simple fact that there has been a decline in active buyers and home buying in the past year. The research from Realtor.com tells us that there is less demand in the market following the new tax plan. Home sales are also on track for a mild year-over-year decline since 2018 and will likely continue this year with a 2% decline. CEO of House Buyers of America, Nick Ron, also commented that sales are going to continue to grow in better markets, but not as fast as they did before.
A tougher road is ahead for everyone who sells houses for a living. One must remain vigilant and determined to persevere through these tough times and achieve their goals for the current year.
