Before we look at our crystal ball for 2018 housing predictions, let’s first recap the past. We saw many things happen, expected and unexpectedly in 2017. When focusing in on the Housing Market, there were highs, lows, and stagnant progress. Rising home prices and appreciation were the housing market highs. The lows included the lack of new construction coupled with low inventory. Surprisingly enough, the one thing that experienced no highs or lows were mortgage rates, staying the same throughout last year.
This year, predictions have been made, some more hopeful than others. So without further adieu, the top 5 housing market predictions for 2018:
- Sellers will notice the housing market will pick up and gain momentum later in the year.
Some renters are finally ready to buy! Because of the lack of inventory, they have had a hard time finding suitable homes. The new tax law won’t immediately help this issue. Potential sellers are projected to list their homes more cautiously, assessing the effects of the new tax plan on them and the overall value of their home. All in all, even with the low territory, the next 3 months might actually turn out to be the best time to buy this year.
- The deficient inventory of 2017 has not gotten any better in 2018. Realizing home prices can’t continue to rise higher than wages, this current situation is becoming unsustainable. Inventory is predicted to pick up slightly and with that new construction has shifted towards building single-family homes rather than rental properties.
- As said previously, home prices saw monumental jumps in 2017 and on into 2018. Although great for potential sellers, buyers have had a hard time keeping up and will continue to have a hard time if prices continue to rise at the past rate. Last year the National Home Price Index increased 5.9% from January to October and really has been on the upward climb for the past 23 months. Which brings us to our next prediction, price growth will continue into 2018 but at a slower rate because if it doesn’t affordability will become difficult.
- Although this might be the best time to buy, some renters are still seeing renting, rather than buying, as the more affordable current option. May millennials are struggling to save up a down payment when having to juggle student loans and high rent. Whether compelled or forced, the current new tax law coupled with higher home prices and a steadily increasing mortgage rate will continue to serve as a negative effect regarding affordability.
- The last prediction of this year concerns mortgage rates. Loans may seem a little more expensive than last year, but mortgage rates are at a historically low. Future home buyers can expect national mortgage rates to hover between 4-4.5% this year. In DC, rates are currently sitting at 4.46% for a 30- year fixed mortgage.