offrs reviews a few 2018 Real Estate housing market predictions

Thinking of purchasing a home this year? Here are some helpful insights from across the industry that might help light the way. In short, it's still too early to tell, but there's enough insight from 2017 to make some predictions. Let's take a look...

If you’re thinking of buying a home in 2018, you probably wish you had a crystal ball to see what the housing market has in store for you. Truth is, we all do. But, while we can't tell what's in your future (or the market's for that matter), we can pull from insights across the industry and look at the data. Let's look at what some are suggesting...

Real estate sales will grow (slowly)

We should see here in the next few months once the data begins to pour in, but some foresee a slow start to home buying in 2018 due to consumers taking time to understand how changes in the new tax laws will affect them. There is, however, some pent-up demand based on wages having gone up slightly in 2017. In addition, Realtor.com® predicts that sales in Southern cities will have the highest growth. Sales are predicted to grow by 2.5% nationally, while many southern markets will see growth of 6% or more.

There will be more homes on the market

One important factor that affected real estate markets across the country was the lack of inventory. When there aren’t as many homes for sale, the competition for the homes that are available typically gets things fairly heated. This contributed to the significant number of bidding wars throughout the 2017 season. It also weighed in on the increase in prices seen in many areas. As the experts track more homes coming into the market in 2018, the transactional pains felt in 2017 are expected to change. Agents and agent teams have likely already felt this shift to warmer waters.

Home prices will steadily grow (but slowly)

How fast a home will appreciate is an important factor for homebuyers. Growth was strong in 2017, and prices have increased over the past 23 consecutive months. In higher ranges, prices are expected to grow but grow more slowly as more homes come into the market. With more inventory, home sellers need to be more competitive and won’t be pricing their homes as aggressively. In the lower-priced, entry-level homes, listing increases are expected. This could result from predictions of lower inventory in this range, as well as more homebuyers mining for gold in the market.

Mortgage interest rates won’t increase significantly

The actions of the Federal Reserve in 2016 and 2017 resulted in small increases in mortgage rates. That leads some experts to think the three interest rate increases the Federal Reserve has scheduled for 2018 will have a similarly-small impact. Some experts see fluctuations in rates that could force a dip below 4% and above 4.5%. But most experts agree that the rates will be in the 4% to 4.5% range at the end of 2018.

Millennials will almost dominate the market

If you’re a millennial, you’ll be glad to know that the experts believe your generation will drive the real estate market in 2018. It’s estimated that millennials will represent 43% of homebuyers in 2018. If this prediction holds true, you can anticipate that sellers will be working hard to make their homes and localized amenities attractive to you.

More people will be considering renting vs. buying

The new tax bill may make it more expensive to own a home, especially in the areas with relatively higher taxes and home prices. In addition, high rents and student debt are making it more difficult for some younger homebuyers to save for a down payment, with Gen X'rs feeling the most weight from these burdens (coupled with the economy of the 2000's hitting their wallets just as they were hitting their career stride). As a result, more people may find that renting is more advantageous for them than buying.

Tax reform could reduce the accuracy of predictions

Tax reform will definitely be a factor in the 2018 housing market. There will be fewer tax incentives for homeownership. Therefore, the reform could slow down the number of home sales and the increase in appreciation that many experts have predicted. On the other hand, some taxpayers may get tax cuts that will make buying a new home easier. It’s difficult to predict if the loss of some tax incentives will encourage those taxpayers to spend their money in other areas, so this will be an important trend to keep an eye on.

Final thoughts

As is true every year, the housing market is a difficult one to predict. Overall, the experts are very optimistic about 2018, but everyone is also aware that the impact of tax reform is a wild card.