What's in store for the market in 2018? While it's impossible to know for sure, experts analyze current trends to predict what may happen.
Home prices and values are expected to rise modestly.
Home prices have been increasing around the country, with cities such as Dallas, Portland and Seattle experiencing the largest year- over-year price gains. In fact, Washington has experienced the fastest rise in housing prices in the United States over the past few years. While the National Association of Realtors anticipates 2018 home prices will rise by 3.5 percent, Freddie Mac predicts they'll increase 4.9 percent. This percentage may seem modest, but for cities such as Detroit, Phoenix, and San Diego, rising home prices may continue the 2017 trend of creating more pressure in the market. The good news is home values in 28 states have risen to above pre-crisis peaks and are at an all-time high.
Rental prices are no longer increasing at the rate of home prices in most areas. Although leveling off of rental prices may take some financial pressure off renters, for those thinking of buying, it's time to turn their dream of home ownership into a reality.
Existing home sales have leveled off for now
Experts predict 2018 will spell more of the same for home sales. Many believe this is due to the increase in interest rates in 2017, which have reduced the purchasing power of many home buyers. Home purchases are expected to rise a modest 2.8 percent (5.8 million) in 2018.
However, patience may pay off for potential buyers. While the combination of economic recovery, comparatively low mortgage interest rates and job growth may have brought more interested buyers into the market, inventory has been tight over the last few years. In response, homebuilding has been up and new homes are expected to hit the market this year, increasing the inventory for potential buyers. Many experts are predicting 2019 will be a buyers' market in many areas.
Will 2018 be a banner year for new homes?
Many experts predict that new home sales will drive the market in 2018. A total of 1.33 million housing stats are expected for 2018, an increase from 1.22 million in 2017. While total home sales are expected to increase over two percent, new home sales are expected to increase eight percent, reaching 670,000 sales.
What about mortgages?
Although mortgages rates may have increased slightly, over the past few years, rates have remained at historically low levels. Freddie Mac, the Federal Home Loan Mortgage Corporation, predicts an increase in the volume of mortgages, which follows other predictions that signal an increase in haome sales.
Freddie Mac predicts a cooling in refinance activity, which is expected to decline to 25 percent. In the past, refinancing has dominated the mortgage market, with borrowers most often refinancing to shorten the term of loan to pay off the principal faster or to refinance out of a FHA loan and into a conventional loan. With the increase in home sales comes a shift to a purchase-oriented market.
The corporation also predicts that more borrowers will tap into their home equity. The increase in home values may prompt borrowers to use some of their equity to complete improvement projects or pay off outstanding debt.
While the national market offers insight to overall trends in real estate, we can give you the scoop on what's happening in our local market. Whether you're thinking of buying or selling or you just want to know more about our real estate market, give us a call!