A look at the trends that will drive the 2018 market
By Jim Parker
CTW Features
Meteorologists with some certainty can call for rain a few days away; real estate professionals can look out that far – in fact, up to a year – to predict if you’ll have a roof over your head.
Yet research and experience isn’t always enough, and experts forecasting the weather, or the housing industry, both can be wrong.
Meanwhile, here’s how housing prognosticators are viewing 2018.
Brad Inman, online entrepreneur who also compiles Inman real estate news for Realtors and brokers, warns he was right about the soaring housing market in his picks in late 2016 for 2017 “but otherwise this year did not unfold exactly as I had anticipated.”
Still, he undertook 10 predictions in December for 2018. Among them: “EBay, Google and Facebook will all expand their real estate business through acquisitions and investment. The real estate opportunity is irresistible.”
Inman also threw in a bonus forecast. “The economy and the housing market will grow like crazy,” the Australian businessman says. “Job creation is at record levels; unemployment is at a 17-year low; wages are feeling upward pressure and companies are investing at a fast and furious pace. A backdrop of political uncertainty will not slow down the global economic thoroughbred that is galloping at a full run,” he says.
“Left in the dust will be housing affordability in many major metro markets, which will further galvanize local political activism and polarize more communities,” he says. “Fasten your seatbelt, 2018 will be a fun and scary but prosperous ride,” Inman figures.
Elsewhere, Housing Wire in late November offered up “six housing predictions to know for 2018.”
Relying on a realtor.com forecast, the online site notes that, “existing home sales will increase slightly (and) new home sales will see the most significant increase, fighting against the low levels of affordable housing inventory.”
Other experts agree, according to Housing Wire. “Home sales are expected to increase slightly in 2018 as new home sales take over the market,” the site says, alluding to secondary market housing financier Freddie Mac’s outlook for September.
Housing Wire quotes Javier Vivas, realtor.com director of economic research, as noting, “Inventory increases will be felt in higher priced segments after home buying season, which limits their impact on total sales for the year. As we head into 2019 and beyond, we expect to see these inventory increases take hold and provide relief for first-time home buyers and drive sales growth,” he says.
The realtor.com predictions for 2018 include:
1. Home prices
They’re expected to rise 3.2 percent in 2018, a slower rate of increase which “will allow for home sales to pick up next year.”
2. Mortgage rates
Home loan interest rates are expected to average 4.6 percent throughout the year, but reach 5 percent for the 30-year fixed-rate mortgage by the end of the year. The Mortgage Bankers Association predicted similar rising rates over the next few years.
3. Existing home sales
They’re forecast to increase 2.5 percent “as the trend in low inventory begins to reverse course.”
4. Housing Starts
New home sales will increase even more than existing home deals, “meaning housing starts will also rise.” They’re predicted to rise 3 percent overall and 7 percent for single-family homes.
5. New Home Sales
They will rise at the same rate as housing starts, 7 percent year-over-year in 2018.
6. Homeownership Rate
The rate will level off at 63.9 percent “after having hit bottom in the second quarter of 2016.”
The federal Department of Housing and Urban Development provides yearly real estate forecasts of the country’s more than 300 metro areas.
Home sales are “currently balanced” with a 1.3 percent residential vacancy rate, according to HUD. Transactions increased 1 percent to 20,200 homes, and the average home price inched up 4 percent to $314,300 during the 12 months ending in May.
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