Realtor.com put together their own study and found some potential results for the real estate market this coming year. All of the following game changers are based on their data collected from their home database and knowledge.
#1 – Supply catching up to demand
For the last 3 years, there has been a shortage of homes for sale on the market, but 2018 may bring change to that and finally catch up to the buyers’ demand. This change would be beneficial to any would-be buyers that previously had a hard time finding a home for sale that met their needs, but was still within their budget.
While it may take a most of the year before things start to turn up, the overall inventory of homes for sale should increase by fall 2018. Most of this inventory will be new homes produced by bullish construction, prices in the higher tiers starting at $350,000 and more. Unfortunately, it’ll have to get worse before it can get better.
#2 – Millennials join the market
As of recent years, the market has been a challenge to most millennials due to student loan debt. Their loans can’t pay themselves. But, there are some bright spots arising for the millennials when it comes to the housing market.
As their incomes start to grow because of the overall economic improvement and their own personal career development, they’ll be able to afford mortgages. In fact, millennials are predicted to be a whopping 43% of home buyers by the end of 2018, which is up from last years 43%. While that 3% may not seem like a lot, the largest generation in US history could add 3% to the home buyers which equals hundreds of thousands of new-home buyers.
#3 – Southern homes selling
Southern homes are increasing in sales and will only continue, including these specific areas: Tulsa, OK, Little Rock, AR, Dallas, and Charlotte, NC. The Southern states are predicted to see a home selling increase of 6% or more compared to a 2.5% national increase for the entire US. These states are, and have been, luring corporations and people with their overall low costs of living, and that means real estate, too. The more corporations moving south, the more individuals needing to live there.
#4 – The potential tax reform
The Republican Party introduced a new tax reform plan that could complete alter these first three game changers. The proposal has yet to been passed or fully accepted as the House and Senate are all in limbo over the tax reform suggestions.
If the Republican’s version does pass with the current provision affecting real estate, 2018 could actually lead to fewer homes for sale and declining home prices and values. However, it will mostly be the upper prices tiers in areas with expensive homes and high taxes in coastal cities. Unfortunately for those of us living in California, that means us.