What are Industry Insiders Anticipating for the Real Estate Market in the Coming Year?
It’s the time of the year when people within the real estate industry, as well as those considering investing in, or making a move within the real estate market, ask professionals to take a deep into their crystal ball to see what is on the horizon for the upcoming year. So, as 2017 draws to a close, here are some predictions for the 2018 housing market.
What Role Will Millenials Play?
Currently, first-time buyers make up approximately 35% of all home purchases in 2017 – still below the 40% that is expected in a normalized market. Although millennial’s are buying, it is not across all regions of the country, but rather in less expensive markets such as North Dakota, Ohio, and Maryland.
For the coming year, the number of millennial buyers is expected to expand further and be one of the biggest influencers in the United States housing market. It is also expected that they will begin buying in more expensive markets. That’s because millennial’s are getting older and further into their careers, enabling them to save more money and raise their credit profiles.
Existing Home Sales
As far as existing home sales are concerned, looking ahead to 2018 we should expect a reasonable and stable increase average of a little more than 5.5 million housing units. In many areas, demand will continue to exceed supply, but a slight increase in inventory will help take some heat off the market. It is because of this, home prices are likely to rise but by a more modest 4%.
New Home Sales
According to many professionals within the real estate industry, new home sales in the coming year should rise by a little less than 10%, with prices increasing by about 4%. While housing starts – and therefore sales – will rise next year, they will still remain well below the long-term average due to increasing costs in relation to land, labor, materials, and regulatory costs. Hopefully, builders will be able to meet the anticipated demand from first-time home buyers.
What About Interest Rates?
For many reasons interest rates continue to surprise and concern forecasters. The expected increase that many professionals have been predicting for the last few years has yet to take shape, and because of this several professionals are predicting that the interest rates will rise modestly and remain low when compared to historic averages.
Is It a Stable Market?
Overall, there is a lot of concern regarding housing affordability. Home prices have been rising across much of the country at unsustainable rates, which represents a substantial impediment to the long-term health of the housing market. However, if home price growth begins to taper, some relief should come in many markets where there are concerns about a housing bubble.
In Conclusion, along with slowing home price growth, there should be a modest improvement in the number of homes for sale in the coming year. The total home sales will likely also be higher than 2017. First-time buyers will continue to play a substantial role in the nation’s housing market, we should hopefully see this increase at a steady rate over the next couple of years.