Important Real Estate Trends to Look Out for in 2018

As 2017 comes to a close, it is time to start predicting what 2018 might look like.  Between supply changes, first-time home buyers, and tax reform; the Real Estate market could have a few wrenches thrown in the mix.  If you were wondering how all of this could affect the coming year, look no further for the professional’s expectations.

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Supply:

                For the past 3 years there has been a listing shortage, but analytics are saying that shortage may be easing up.  While the beginning of 2018 is looking like it will continue the 4% year-over-year inventory decline, there is reason to believe that net inventory will see it’s first gain since 2015.  What could be causing this nation-wide turnaround?  New construction.  By adding this new inventory there is less shuffling of people from home to home, and actual additional inventory.  This is great news for new markets, and to add to that good news, it also seems that there is a nation-wide price increase by about 3.2% year-over-year.

Millennials are finally entering the market:

                Millennials make up the largest generation in U.S. history and they are officially entering their 20s and 30s, where the average age of first-time homebuyers is.  While the massive student loan debt won’t be going away any time soon, there are a number of things that seem to be working in their favor.  At this point their incomes are growing due to their career development as well as the fairly strong economy, which allows for high mortgage possibilities.  Estimates have Millennials making up 43% of the home buyer mortgages by the end of 2018.  This is up from 40% in 2017.  Of course 3% doesn’t sound like a lot, but it would mean hundreds of thousands of additional buyers.  This along with the expectation that mortgage rates will rise to 5% around the same time should add extra pressure.

Tax Reform:

                Given the Republican Party’s tax system changes, a lot of changes could be coming on this front.  While the House and Senate hasn’t had their official votes, if this reform does come then it could have a real affect on the upper price points.  Since these expensive homes are expected to be affected the most we could be seeing a decline in prices and slight slowing of those markets.