2018 was a historic year for the housing market; the six-year streak of lowering inventory finally snapped. It came as a surprise to many, but it had to happen. The year started with the lowest inventory of homes for sale in the history of Massachusetts with only 11,000 homes for sale on Jan. 3, 2018. This created a busy winter and spring full of bidding wars, buyers paying over asking price and a plethora of frustrated buyers and Realtors all over the country. 

By summer there was a slight change in the air and homes weren’t selling quite as fast, which at first seemed like a typical seasonal slowdown. Spoiled for months if not years, sellers began to get frustrated that their homes weren’t selling right away. Then in early August, it happened – the inventory of homes for sale was suddenly higher than in early August 2017. 

Fall was for the most part lackluster, as inventory peaked with 19,766 homes for sale in early October, more homes than same timeframe in both 2016 and 2017. Home sales were dipping and there were noticeably more price adjustments. In fact, the percentage of price adjustments to homes listed showed that price adjustments were up nine out of 11 months this year as of the end of November. In addition, the number of homes that were expired or canceled in October and November were both higher than last year, as more home sellers gave up on selling and likely took their homes off the market for the holidays. 

This means that 2019 will be the best year to be a homebuyer in about four years. This will be especially true in the spring when bidding wars usually peak. There are four key areas both buyers and sellers should be aware of going into 2019. 

Expect More Inventory 

The number of homes for sale in early January will be higher than January of 2018 and possibly higher than January of 2017 as well. That will likely set us up for a spring market much like the spring of 2016, which was much more active. Historically speaking, our inventory was very low even then and is still very low, but the improvement will be felt by homebuyers who were looking last year and didn’t land a home, and especially their Realtors. With inventory similar to 2016, if demand stays strong it still won’t leave much slack in the market.  

Bidding Wars Will Be Everywhere 

Higher inventory means buyers have more choices. A slightly slower economy also means less demand. Both factors are very good news for buyers. Don’t be fooled into thinking there won’t be any bidding wars because there will be many, especially in the late winter and early spring as usual – albeit fewer than spring 2018. Most homes won’t sell for as much over asking as they were selling for this year. 

Interest Rates Won’t Go Up Much More  

Rates have gone up about a full point in the last 12 months. It’s been pretty much continuous all year. However, at the end of 2018, they dipped back down about a quarter point. As a general rule, the better the stock market does, the more rates go up; the worse it does, the more rates go down. Since we are in a bit of a dip in the economy partly due to trade disputes, the market has slowed a bit and the Federal Reserve has backed off their messaging of continuing to raise rates into 2019. The stock market’s slowdown has cooled bond markets and caused rates to dip to their lowest level since August. Based on unemployment and quarterly QDP reports I am doubtful that we will see a full-blown recession (three consecutive quarters of negative growth). 

Expect More Move Up Sell–Buys 

One of the issues many sellers who have wanted to upgrade have had over the last couple of years is they were scared their home would sell too fast to allow them time to find the home they wanted. With more inventory and a slightly slower market, it will be much easier and less intimidating for a seller to take the leap of selling and buying a new home. Therefore, I believe sell-buys will increase. More buyers should have bought homes this past fall, as it is the best time of year to buy a home. Unfortunately, when the market adjusted and many homes didn’t sell right away, many buyers were fooled into thinking that there had to be something wrong with the house they were eyeing. 

It appears that sales in 2018 will end up slightly lower than in 2017. I think that overall numbers of homes sold in 2019 will be higher than in 2018, mostly due to the increased inventory. The increase will loosen things up a bit and enable more buyers to land homes, which was what held the market back in early 2018. If sellers are smart, they will list early in the winter when inventory will be at its lowest point of the year and buyers tend to compete. I do not think it will be a bad year for anyone, but it will undoubtedly be a better year for buyers. 

Anthony Lamacchia is broker–owner of Woburn-based Lamacchia Realty Inc. He can be reached at anthony@lamacchiarealty.com. A version of this column originally appeared at lamacchiarealty.com.