2018 Trends In Real Estate

That Could Be Major Game Changers

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Looking through historical real estate driven information as well as economic indicators we were excited to see what kind of potential the next year holds and boy is there ever lots of change ahead and we love it!

In the year to come, we expect changes in the real estate landscape with changes in appreciation, inventory and generational shifts. So hold on to your hats, it’s going to be a wild, but fun, ride in 2018.

2018 Real Estate Game Changer #1: REFORMED TAXES

The proposed changes to our taxes could change potentially everything. If this version of tax reform does pass with the current provisions affecting real estate, expect to possibly see fewer home sales and waning home prices. However, it seems it would be the upper tiers that would likely be affected the most, in areas with costly homes and higher taxes.

2018 Real Estate Game Changer #2: MILLENNIALS

In 2018 the real estate market will continue to challenge the millennial age group but there is a light at the end of the tunnel for these millions of Americans. Millennials are now at an age bracket where they see incomes growing allowing them to take on more expenses and that means a bigger mortgage. This is due in part to both career growth and a stronger economy. But either way, it is a win-win for the millennials for certain.

As the largest generation in United States history reaches their 20s and 30s this time period sees them settling down and starting families, and are super motivated to buy. In fact, it looks like millennials might just be 43% of home buyers taking out a mortgage by the end of 2018, up an almost estimated 40% in 2017, based on mortgage originations. That could translate into hundreds of thousands of additional new homes. All of that being said, even with the odds in their favor they shouldn’t wait to buy as the prediction for mortgage rates to rise to possibly 5% by 2018’s end.

2018 Real Estate Game Changer #3: INVENTORY

Finally, we have data showing the housing supply catching up with housing demand. After so many years of a severe shortage of homes for sale what we see is towards the middle of 2018 that will all change and the shortfall will finally ease. While the beginning half of 2018 still looks to be challenging for some buyers that growth of inventory should start to show itself towards summer. That is a huge development for so many who have wanted to buy but have been frustrated in their search in finding a home that fits what they not only need but also is in budget.

Buoyant construction is the engine that will be turning this ship in a new direction. Bringing newly constructed homes into the real estate market and opening up new opportunities for people to trade up when buying a new home. It is increasing inventory not just moving people from one place to another in already existing houses.

It should be noted though, first-time buyers of starter homes may have to still sit and be patient for a little longer. While relief is predicted for the mid-range defined in this market as homes priced between $350 – $700k, it will take just a bit to make its way down to the lower tiers. Most specifically you will see growth in the mid-range tiers with prices ranging from three hundred and fifty thousand and higher.

As the real estate inventory increases, the costs of homes are also expected to slow to 3.2% growth year over year nationwide. Again, though we find it will be higher-priced houses that will come under pressure with price reductions since the inventory in the $1.4 million range and higher has increased drastically since September of 2016. As we talked about before, it looks like it will get a bit worse before getting better for new and starter home buyers, especially those looking at mid-priced houses.

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Contact the Carpenter | Kessel Homeselling Team