National Housing Market Outlook

2019 Outlook in 6 Minutes (or a Few Quotes)

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John Burns

May 24, 2019

John sat down for six minutes with The Real Estate Guys earlier this year and shared some of our outlook for 2019. Here is the audio excerpt, and below are a few quotes:

  • No construction growth. “[I am] highly confident you are not going to see construction grow very much.” Among executives, “you will see cautious behavior” in 2019.
 
  • Focus on efficiencies. On the smart home invasion: “Amazon, Apple, and Google want to be not only on your smart phone and in your car but with you in the house, so there is a lot of smart home technology coming into the homes. [Builders] are pivoting toward a better experience in a new home.”
 
  • Cheaper homes. “[Builders are] pivoting down in price point,” and there is “a lot of discussion on off-site construction and just being more efficient, starting with panelization.”
 
  • Better rental opportunities. While “homeownership has been ticking back up” and “people want to own,” there is “not a stigma to being a renter anymore,” and “now you can rent a home from a professional company.”
 
  • Cautious millennials. “Those born in the 1980s who are coming into homeownership right now saw firsthand what a recession looks like, and they associate recessions with foreclosures.” They ask themselves, “Do I want to have a 30-year mortgage when I lose my job?”
 
  • 7% hit to purchasing power. Rising mortgage rates were “the primary reason [2018] home sales slowed all year long. A 100-basis-point increase in the mortgage rate reduces your ability to get a mortgage by 7%.” Since this was recorded, rates have plunged, and sales have improved.
 
  • Fewer luxury sales. “The one thing that is underappreciated [by forecasters] is the moveup market,” where approximately 25% of demand will disappear if mortgage rates exceed 4.5%.

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John Burns
Chief Executive Officer
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