What You Need to Know About the 2018 Real Estate Market
2018 is here, so what can home buyers and sellers expect this year? We've rounded up a few of the top real estate trends and market predictions straight from the experts in the field. Time will truly tell what the year brings, but here are a few things that are expected to happen in 2018.
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Home sales are expected to rise.According to the National Association of Realtors (NAR), existing-home purchases will rise 2.8% in 2018, to 5.8 million. In a hot real estate market, competitive buyers can have the advantage by getting their financing in order, saving for a competitive downpayment, including a personal letter to the seller with their offer, and hiring a seasoned real agent who has a good reputation in the community.
Home prices are also on the rise.According to the Home Buying Institute (HBI), housing market forecasts through 2018 suggest home prices in the U.S. could rise somewhere between 3% and 5%. The HBI considers this normal growth from a historical standpoint, as home prices over the past 30 years have tended to rise 3–4% annually. As home prices increase, buyers should evaluate just how much house they can really afford, and stick to those boundaries.
Mortgage rates are rising, too.The average 30-year fixed mortgage rate stands at 4.375% at the writing of this blog, according to data from Wells Fargo. Expect that figure to rise as the U.S. economy improves and the Federal Reserve tries to keep inflation in check. "Mortgage rates will rise by 0.25%, and possibly by 0.50% in 2018, if things get crazy," says Richard Haynes, a real estate broker at Manhattan Pacific Realty, in Los Angeles. "If rates go higher than that, the Fed will step in and reinvest more principle and buy up mortgages to lower rates and get them under control."
Millennials rule the market.Millennials make up the largest proportion of homebuyers, a majority of which are buying properties for the very first time. According to Realtor.com, this generation could make up as much as 43 percent of the buyer’s market by the end of 2018. Moving into their mid-20’s and 30’s, millennials are beginning to experience some income growth and are able to take on larger mortgages.
Southern homes are selling.When it comes to home sales growth, Southern cities are expected to beat the national average in 2018. According to realtor.com, the Southern home sale market is expected to see 6% or more growth compared to 2.5% nationally. Temperate climates, more affordable real estate, and lower costs of living are the driving forces here.
More homes selling in high-tax states.The recently enacted tax reform bill will affect homeowners in high tax states (like California and New York) with the limiting of state and local mortgage deductions to $10,000 and is thereby going to affect the 2018 market.
"Now, with the new tax law, I'm predicting a large number of second homes in high tax and high-cost states to hit the market," says Steve Hundley, real estate specialist and chief executive officer at One Park Place, in Del Mar, Calif. "As a byproduct, we will see key markets with a bump in inventory. This phenomenon, combined with increased mortgage rates, will cause prices to flatten out a bit, thus making homes more affordable."
More vacation home buyers.Vacation home purchases are expected to tick upward. "The new tax plan will likely spur interest in second homes, such as vacation homes, for those who can afford them. Interest rates and interest deductions are not as important as many of these purchases are cash transactions," says Glenn Phillips, CEO of Lake Homes Realty, in Birmingham, Ala. "Economic optimism will fuel this sector of the real estate market."
The Heat Continues: 2018 Real Estate Trends (DaveRamsey.com)
5 Trends Shaping the 2018 Real Estate Market (TheStreet.com)
2018 Real Estate Trends You Can't Ignore (FortuneBuilders.com)