What to Look for in the Housing Market in 2018

New year 2018 balloons

When it comes to the U.S. housing market in 2018, there are several factors to consider when making predictions. First, there are many housing markets, not just one. Other more general factors outside of the housing market itself—like population growth, the cost of renting, actual affordability based on current incomes, possible changes in tax policy, changes to lending guidelines, and even world events—make it difficult to accurately predict what the 2018 housing market may look like.

While the overall economy based on the stock market, the nation’s job numbers, and the consumer confidence index has seen a banner year, a shortage of new and existing housing inventory drove prices in many key markets, creating a highly competitive environment for homebuyers in 2017. According to Realtor Magazine, home prices rose 5.5 percent on average this year, while interest rates ticked up a quarter of a percentage twice—and may do so again before 2017 is over. So, what can we expect to see in the coming year?

General predictions for the housing market in 2018, culled and curated from a range of pundits and experts:

  • Strong demand and a lack of available housing inventory is likely to continue
  • The National Association of Realtors, predicts prices will jump an additional 3.5%
  • Freddie Mac forecasts a 4.9 percent increase in home prices in 2018
  • Increases in price may force potential buyers to invest more of their disposable income in order to afford a home
  • Interest rates should continue to increase, although slowly, depending on the Federal Reserve’s monitoring of employment numbers and the rate of inflation
  • Refinancing activity will continue to slow as rates rise and the market continues become more purchase-oriented
  • According to the Federal National Mortgage Association, a.k.a Fannie Mae, an increase in new construction is expected to be a primary driver in 2018 home sales, “coupled with a moderate increase in mortgage rates,” which should help slow price increases
  • While middle and low-income buyers continue to look for homes to purchase, builders continue to focus on the mid- to upper-price range. This discrepancy between supply and demand will make finding affordable house more difficult for those with less income
  • Those who’ve put off selling should continue to see equity growth in most major markets
  • As equity grows for existing homeowners there’s likely to be an increase in the number of homeowners taking cash out

Whether you see it as good news or bad, based on these observations, it would seem that the housing market in 2018 will not be unlike 2017—that is, if none of the other factors mentioned above come in to play. Stay tuned.

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