We may not have a crystal ball to see exactly what 2018 holds for the housing market, but thankfully, we have forecasts from top economists and housing experts to share their insights into what the future may hold.
Here are 10 things to expect in 2018:
- Waiting to sell: If passed, proposed federal tax code changes relating to tax breaks and how long sellers must live in their homes to qualify will make some people wait to list their homes, worsening the inventory shortage.
- Surbans: New entries to the real estate market, like millennials, will drive the development of surbans, a new, denser kind of suburb with modest-sized homes built close to transit, complete with walkable neighborhoods, some urban amenities and good schools.
- Sellers’ market: Homes will sell even faster than they did this year, when nearly one in five sold within a week. Low inventory will continue to increase home prices, outpacing first-time homebuyers who struggle to save for a down payment. There are 12 percent fewer homes to choose from nationally than there were a year ago, and 51 percent of for-sale properties are in the top one-third of home values, which are out of reach for first-time buyers.
- Mortgage rates: Rates will rise from just below 4 percent to 4.3 percent or higher for a standard 30-year loan. And because of high demand, home prices are expected to keep climbing, pushing monthly payments 15 to 20 percent higher.
- Housing bubble: Surprisingly, analysts aren’t seeing a bubble due partly to people making larger down payments or paying all cash, and partly to sellers getting their asking price – or more.
- Roommates: More people will be doubling or tripling up to afford skyrocketing rents and prices. And it’s now even easier with real-estate startups like Nesterly, which matches younger renters with baby boomers, and CoBuy, which helps people go in on a house together.
- Builders: Builders will turn their focus to entry-level homes as they will be the key to bringing home prices down – and concurrently heed the call of first-time and lower- to middle-income buyers demanding more affordable options.
- Renovations: Many homeowners will remodel rather than sell – even in a sellers’ market. So instead of buying a new home, homeowners will invest in remodeling to make their current homes feel and look new.
- Design: Baby boomers and millennials will drive home design as new starts and renovated homes will feature designs that appeal to both generations, such as wide hallways that can accommodate both strollers (for young families) and/or wheelchairs (for aging boomers).
- Prices: Market prices will continue to grow, albeit at a slower pace – climbing 4.1 percent in 2018 – and 1.1 percentage points higher than the ‘normal’ annual appreciation closer of 3 percent, but slower than the current annual pace of 6.9 percent.
With so many exciting predictions on the horizon, we can’t wait to share in your real estate journey in 2018 – and beyond.
Because at DeLeon Sheffield Company, ‘We’re More Than Realty; We’re Family.’
