Real Estate Business Will Contnue to Thrive in 2019
So far, 2019 has proven to be a year with major economic development in the United States. Earlier in the year, the longest government shutdown in the history of America came to an end and in the heart of global trade wars, U.S-China feud and a very unstable stock market, the question looms: How exactly will the real estate markets be holding up at the end of 2019?
Global economic sectors took big blows in 2018 and while the real estate sector did cool off in some markets, there was no reason for a major setback. However, the reality of the events is that if the housing markets get cold, financial houses and banks get pneumonia. Consequently, the global economy may hit rocks if the real estate sector gets bad as it rests heavily on it.
Given the instability in the stocks market and the huge dependency on the real estate sector, 2019 remains a pivotal year for America’s commercial real estate and housing since the economic crash of 2008. Here are the reasons.
1. Home Prices Plummets in Coastal Region.
In 2018, there was a noticeable decrease in the home price in markets like those of San Francisco and New York. This was important as it helps prevented oversupply which was already occurring in those areas. Given the cool off of late 2018 and the recent reduction in interest rates, consumers may be promoted to make purchases when they want to and this could be great for the economy.
2. Products Gaining Their Way Back Into The Market.
One of the factors that helped the nation’s real estate sector in 2018 is the fact that products that were held back in 2016 found their way onto the markets. This is happening again in 2019 at a better pace. The reality of this is that developers will have more work to do as affordability of raw material increases even as demand is not at the highest level. However, if the inventory level continues to grow, it could turn out disastrous to sellers while the sellers stand to benefit greatly.
3. The Opportunity Zone Program
Since its passage into law as the 2017 tax cuts and job act, the opportunity zone is set to play a vital role in the real estate market in 2019. The program was instituted to help revive the underdeveloped area of each state with the aid of private investments instead of taxpayer money. Experts such as the duo of Alexander Romanov and Viktor Rybachuk, who are both investors from Seattle, have heralded the program as one of the most important steps to attaining balance in the real estate sector. To benefit, however, taxpayers would have to set aside their capital gains for seven years before 2026. Consequently, 2019 happens to be the best year to reap the full benefits of the Opportunity Zone Program.
4. Unstable Interest Rates
One very unstable element in the nation’s real estate sector is the interest rate. Just at the beginning of 2018, the gain on ten-year treasuries jumps from 2.47 percent to 2.67 percent towards the end of the year. However, the ten-year treasury plummeted from a record high of 3.27 percent to 2.70 percent in January of 2019. This level of instability in interest rates will play a major role in the affordability of homes in 2019.