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  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%.