Five housing and mortgage trends to watch out for in 2018Michelle McQuade | February 20, 2018
Thinking about buying or selling a home this year? One of the best ways for you to prepare is to gather information on some emerging trends in today’s real estate market.
Here are five significant real estate trends you should know about:
- Soaring home sales
According to a report from the National Association of Realtors, existing home sales in 2017 were expected to increase by about 3.5% to 5.64 million. NAR predicts that numbers will increase by another 2.8% this year to 5.8 million.
With today’s robust housing market, it might be a smart move for buyers to reconsider their “must-have” items for potential homes. They may need to compromise slightly on factors such as home size, price, neighborhood selection, and commuting time.
- Home prices will increase slightly
Housing market forecasts from the Home Buying Institute (HBI) shows that 2018 US home prices could potentially increase from around 3% to 5%. From a historical standpoint, this is considered a normal rate of growth, as home prices tend to rise about 3% to 4% annually over the past three decades. With increasing prices, buyers need to reconsider their goals and evaluate what type of house they’re able to afford. Don’t let the hot housing market pressure you into a closing a deal that may not be financially reasonable.
For buyers, the best way to approach this is to save longer. Even if you’re currently debt-free and have an emergency fund to rely on, you could be living in an area where your income is unable to support the price of a mortgage. This isn’t something to worry about, as renting will help you increase your savings. If you’re looking to buy a home in a high-end market, waiting might be your best move.
- More boomerang buyers
According to the National Center for Policy Analysis, around 10 million US residents during the housing bubble were forced to foreclose on their properties. Given the seven-year waiting period following a foreclosure, this may mean that around 1.5 million Americans may potentially re-enter the housing market in 2018. Since the market has more demand than supply, this is a great sign for home sellers (not so much for home buyers, however).
- Increased vacation home buyers
In 2017, a new tax reform bill took aim at homeowners living in high tax states such as New York and California, limiting local and state mortgage deductions to just $10,000. The bill will give already affluent Americans more money, which means vacation home purchases are likely to increase. Since many of these purchases are completed through cash transactions, interest rates and interest deductions will not be much of a factor. Economic optimism will likely serve as the key ingredient in this particular real estate market.
- Banks will actively pursue more buyers
Real estate investors will be able to see more loan opportunities in 2018 as banks get more aggressive in pursuing buyers. In the past year, the banks opened up lending and are now offering a wider variety of loan products. This increase in lending will attract a larger volume of buyers – a trend that will solidify further this year.
Need help looking for homes for sale in Chagrin Falls, Bainbridge, Solon, or other desirable communities in Cleveland, Ohio? Talk to me at (440) 823-2448, or send me an email at firstname.lastname@example.org.