What’s in store for real estate in 2018? Here are some predictions for the market:
Home Sales Increasing
Total U.S. home sales are expected to increase by 2% for 2018.
Economists are also predicting 1.33 million new housing starts in 2018 – up from 1.22 million in 2017. Low inventory has been a frustrating part of the home-buying process and new home construction will help to relieve some of those inventory issues.
Mortgage Rates and Home Prices To Rise
U.S. economic growth is positive with the stock market going strong with a rise of 10% in 2017. Mortgage rates are expected to increase moderately and home prices are expected to increase by 4.9%. Homeowners will continue to build equity in their current homes. These are all good signs of a healthy economy.
Rising home prices and rents will outpace increases in income in 2018. The rental market is expected to have low vacancies and thus a rise in rates of 3-6%. The inventory of single-family homes will continue to be tight and result in higher prices for home purchases as well. Newly constructed homes will be generally be more expensive due to higher material costs and wages. Much of this is due to 2017 natural disasters (including multiple hurricanes).
Baby Boomers and Millennials
Baby Boomers are slowing down with home purchases (due to their age) and Millennials are in line as the largest home-buying sector. The great recession and tremendous college debt have affected Millennials, putting them behind a few years in making a home purchase. These former renters are now getting into position to blossom into homeowners. Looser mortgage restrictions will play a large role in helping them succeed with the American Dream.
Boomerang Home Buyers Are Back
Home buyers who lost homes during the recession will be rebounding back. (The normal foreclosure waiting period is seven years.) The average age of a homeowner who lost a home to foreclosure during the recession was 45 – as a boomerang buyer they will now be in the their early 50s.
Lending Guidelines to Lessen
There is an expectation that lending guidelines will be rolled back therefore allowing potential home buyers easier access to mortgages.
No Housing Bubble
Economists are not foreseeing a housing bubble and state there is little risk for home-price declines. This is great news for those planning on buying a home in 2018!
Our Local Market
The local economy has been strong and Cincinnati is now the largest in Ohio at $132 billion as well as the fast-growing city in the Midwest. Read more here.
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Sources: Realtor.Org, FreddieMac and Market Leader.