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Zillow predicts rising mortgage rates will discourage buyers

Real estate website releases 2019 forecast
Posted: 10:31 AM, Nov 28, 2018
Updated: 2018-11-28 17:31:29Z

The story of Denver's housing market in recent years has been all about rising home values, and low inventory. But there are new trends emerging in 2019 that are changing the narrative.

On Wednesday, Zillow released its housing market forecast for 2019. The company says a major factor next year will be rising mortgage rates. Right now, the rate on a 30-year fixed mortgage is 4.75 percent. By the end of 2019, Zillow predicts that will rise to 5.8 percent.

While still historically low, this would be the highest rate since the recession, and the highest that most millennial generation homebuyers have ever encountered.

At the current rate, for a $500,000 home with a 10 percent down payment, your monthly mortgage would be $2,703, according to BankRate.com.

At a rate of 5.8 percent, that mortgage goes up to $2,996 per month, an increase of almost $300 per month.

Home values in Denver aren't rising as fast as in recent years . Zillow is forecasting home values to increase 5 percent in the Denver metro in 2019, down from 7.9% percent in the past year.

Zillow said other trends will affect the housing market in 2019. The company predicts cities that lost out on Amazon HQ2 will see interest from other tech companies. It also predicts commute times will increase as more millennials move to the suburbs.

Meanwhile, the Commerce Department announced Wednesday sales of new homes fell almost 9 percent in October. Nationwide, the number of newly built homes sitting on the market is the highest since 2009.

On Thursday, Realtor.com will release its 2019 housing predictions.