The housing market rode through a substantial amount of change in 2017 and developments forecasted for 2018 are expected to be on a similar path. The realtor.com® data team reviewed historical data and other economic indicators and put together a forecast of what is expected for the housing market in 2018. From movement in home inventory to price increases to generational and regional changes, here are a number of the most impactful trends expected to alter the housing market.
For Sale Inventory
After three years of shortages of homes for sale impacting the market significantly, the realtor.com economics team is predicting that the shortages will loosen up in the second half of the year. Danielle Hale, Chief Economist for realtor.com says the beginning of the year could still be a bit challenging for buyers, but there is expected growth in inventory. An increased level of new home construction is expected to be cause the primary shift in expanding the amount of available inventory.
Though the housing market will continue to present some challenges for millennials looking to enter the housing market for the first time, Hale says millennials in general are having an easier time taking out mortgages on homes in various price levels. “They’re at that point where they’re seeing their incomes grow, and that will help them take on bigger mortgages,” says Hale. “That is because of both the overall strong economy and their own career development.”
Millennials have surpassed boomers and now represent the largest generation in United States history. As they reach the stage of life in their 20s and 30s when they are looking to settle down and starting families, they are more encouraged to look for and purchase a home.
The South is Expected to Lead Increase in Home Sales
When it comes to an increase in home sales, the South is expected to exceed the national average in 2018. Some markets are expected to see 6 percent or higher growth, compared to an expected 2.5 percent growth on a national level. The South has been attracting corporations and individuals with comparatively lower cost real estate, moderate temperatures and style of living in general. Added tax reform that has recently been passed is expected to have affects as well.
Tax reform is anticipated to affect different people in different areas of the country in different ways. The Florida Chamber of Commerce says the tax overhaul is a plus for businesses looking to relocate to Florida. The Florida Chamber pointed out that people moving to Florida from seven states in the Northeast and Midwest regions brought with them about $80 billion in income between 1992 and 2015. The states include New York, New Jersey, Illinois, and Ohio.
Ten years after the real estate market crash, home prices have gone back up to the pre-crash levels, but the market is substantially different than it was before the crash. The challenges posed by limited for sale inventory, challenges for new construction, and other developments will take some time to work with, but with the economy remaining on a strong path, homebuilders aiming to relieve inventory shortages, tax reform attracting businesses and individuals to Florida, and the surge of millennials expected to enter the housing market, the future of housing in Florida is looking very optimistic for both buyers and sellers.