Tarek Morshed Q1 Market Update 2019

March 11, 2019 – 5 Minute Read

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Hello everybody,

Q1 2019 market update here including a condensed video format version.

So far 2019 has started extremely strong exceeding expectations.  In my last update I mentioned we would likely see our next strong appreciation cycle (after 5-6% annually in 2017 and 2018) begin mid to late 2019.  I would say it’s starting a quarter early….as in…now!

Currently:

Averaged across all price bands/sectors, market supply is at 2.44 months which is considered a very low inventory/ high appreciating environment. For context, a 6 month supply (enough inventory to meet current rate of demand averaged over last 12 mths) is an equilibrium market.

  • $0-$500k we are 2 months or less, severely undersupplied and likely will see 7-10% appreciation
  • $500k-$1M we’re at about 3.5-4 months supply. Down from 5-6 mths in 2018 and projecting to see 7-8% appreciation.
  • $1m-$2m we’re at 7 months supply, also down from 10 mths in 2018 and projecting to see 5-6% appreciation.
  • $2m+ is is approaching being undersupplied (as long as it’s highly relevant to today’s cleaner lines and transitional aesthetics)

The reasons for whats happening:

  • Very strong job growth numbers since Q4 of 2018 along with announcements by big players (Google, Oracle, Indeed, Army Incubator etc) have created a jump in real-time demand
  • Strong movement from lifestyle buyers including the next wave starting in Austin – international buyers (more in future around this)
  • Interest rates have tempered and not expected to move up this year
  • Average household income has finally seen positive gains relative to price appreciation in housing…the delta is about 25% vs 35% as it was in 2017 and 2018

Looking Ahead:

I expect the year to play out as it has begun with appreciation rates being very strong as described above.  I see 2019 as the markation point for the next 4-5 year upcycle of strong growth in real estate.

We will likely outperform most markets across the country in this period and will be more insular to pending recession concerns being echoed across the land.

Hope this was helpful and as always call us and we’ll be happy to discuss whats going on in your particular sector.