Over the past several years, the housing market has gone through a number of changes. Prices have gone up, but the number of houses for sale hasn’t really changed. Real estate professionals, potential buyers, and potential sellers are all wondering what 2018 will bring.
Many experts believe that the housing market is going to cool off a little, but expect it to remain healthy over the next year. As wages increase and employment grows, more people will be looking to purchase homes.
Here’s what experts are expecting to see in the housing market in 2018.
1. Millennials Will Start Buying Homes
Millennials haven’t embraced homeownership as much as other generations, but as they age, they will start considering purchasing a house. This year, experts expect to see more Millennials become first-time homebuyers.
2. It’s a Seller’s Market
Experts have considered it to be a seller’s market for a few years, and that’s not going to change. Home prices are anticipated to increase by 4.2% by November 2018 from November 2017. That’s a smaller increase than from November 2016 to 2017, which was 7%.
These prices are great for sellers, of course, but they may present a bit of a challenge for potential homebuyers.
3. More Houses Will Come on the Market
Buyers looking to purchase a home now are finding that they don’t have a huge number of options, but 2018 is going to see that change a bit. While there will still be greater demand than there is supply, experts expect to see more homes come up for sale during the year. However, they don’t expect it to happen right away. Potential buyers may need to wait until the second half of 2018 to see more options hit the market.
4. Expect an Increase in Mortgage Rates
While rates have been quite low for several years, most agree that we’ll see an increase in 2018. How much of an increase is up for debate. Most experts anticipate it will be somewhere between 4% and 5%, with many believing that the final number will be somewhere around 4.5%. Last year ended 30-year fixed-rate loans at 4.25% and 15-year mortgages at around 3.65%. Even if 2018 does see highs of 5%, that’s still significantly lower than where the market has been.
5. Changes in Tax Law Will Have an Effect
No one is certain what that effect will be, but the tax bill passed at the end of last year will certainly impact the housing market. Many predictions made for the 2018 market were done so before the tax reform bill was passed, so they may end up being off.
One of the biggest changes that will impact the industry involves deduction caps. The mortgage interest cap was dropped to $750,000 and the property tax deduction fell to $10,000. On the other hand, the standard deduction individual taxpayers can claim increased to $12,000, while those filing jointly can now take $24,000. This could mean more homebuyers take the standard deduction instead of itemizing, so they won’t take the mortgage interest rate deduction anyway.
With hundreds of changes in the tax reform bill, many people aren’t sure how the market will be impacted. Some expect sales to drop, though others aren’t certain that will be the case. The higher-priced housing markets will certainly feel a larger impact, but again, no one is sure just how much of an impact it will be.
6. More Homes Will Be Built
In November 2017, construction of new houses was up by 12.9% from the previous November, and numbers reached their highest in ten years. While homebuilders might not be as busy in 2018, most do expect to see the construction of single-family homes to increase by 7 or 8%. Multifamily dwellings may not be in as much demand, so construction companies that focus on these structures may not be as busy.
It is important to note that land, materials, and labor costs to build houses continue to rise, too. This means that new homes may not be an option for the low- and middle-class. Those who are looking to purchase their starter home may also find that the prices are a bit higher than they expected.
7. Renting Is Still an Option
Of course, many people will still elect to rent in 2018. Data from the Pew Research Center shows that the number of people renting is at its highest point in 50 years. Many people are choosing to rent instead of buy for a number of reasons. From baby boomers to Millennials, renting is popular across all generations.
Selling your home this year? The Attic can help store your personal items while your home is being shown. This will increase the chances of your home selling faster. Give us a call (662) 840-5300 or schedule a visit to check out our storage facilities in Tupelo.