The booming real estate industry is the healthiest it’s been in the last 30 years with home sales and prices near where they were during the housing boom — and there’s none of the drama involved due to a more stable economy. So what’s in store as the industry looks ahead to the year to come?
Sales and interest rates will likely increase
The National Association of Realtors (NAR) predicts sales will increase by nearly four percent in 2018. Additionally, interest rates are expected to creep up as well — however, they’ll still be considered low, compared to historical levels. If you have qualified buyers who are on the fence about purchasing, use this opportunity to encourage them to purchase before mid-year so they can take advantage of these lower interest rates.
Millennials may continue to put off purchasing a home
The percentage of first-time buyers fell slightly in 2017, according to NAR. One reason is many millennials are feeling financial pressure from student loan debt, coupled with relatively low wages, which makes it difficult for them to put a downpayment on a home. Millennials who may be interested and qualified to purchase now may find it difficult to do so. In pricier markets, many feel squeezed out of the market and unable to purchase even a so-called starter home.
Low inventory, especially for new homes
While there may be a 3.9-month supply of homes, according to the most recent monthly report from NAR, we’re approximately 250,000 units light on what is necessary to meet the 50-year average annual demand level for new construction. The pressure will be felt more strongly in certain markets, however the overall speed of the housing market will act as a stabilizing force. The good news is that single-family housing starts are projected to increase more than nine percent in 2018, according to the U.S. Census Bureau, which will ease pressure in many areas.
Published on 2018-01-18 05:00:36
