According to Zillow director of economic research Aaron Terrazas, rising mortgage rates will set the stage for housing market conditions and changes in 2019.
Says Terrazas, rising rates will "affect everyone, driving up costs for homebuyers and creating more demand for rentals. Even current homeowners could start to feel locked into their mortgage rates." Looking toward 2019, Zillow identifies six major trends expected to hit housing including weakening affordability for mortgages and rentals, longer commutes, the ramifications for "HQ2 losers," and the impact of natural disasters locally and nationally.
While in the past, builders have returned quickly in the aftermath of natural disasters – typically building nicer and more expensive homes than before – that may not be the case going forward. Building costs are on the rise, and insurers are increasingly reluctant to offer policies in danger zones (or are charging higher premiums to do so) – both of which could translate into slower and costlier rebuilding. Flood losses are growing as well, and projections for homes inundated by rising sea levels and storm surges over the course of a typical 30-year mortgage begun in 2020 are not encouraging.
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