US Real Estate Forecast - 2018
While the US real estate market has not always been on the upswing in recent years, Freddie Mac’s September Outlook report states that 1.33 million housing starts are predicted next year—up from 1.22 million in 2017, meaning that new homes are forecast as a primary driver of sales in 2018. “The economic environment remains favorable for housing and mortgage markets,” says Freddie Mac chief economist Sean Becketti. Total home sales are expected to increase about 2% from 2017 to 2018. This is good news for many, but it’s still important to remember that old averages like 1.5 million housing starts a year is not currently the reality since drivers of demand growth do not favor it: population growth is down, and average household size is up. The moderate increase in mortgage rates combined with the modest yet substantial rise in housing starts is expected to keep the home price increases manageable. Mortgage demands remain unchanged even as interest rates fall. Freddie Mac forecasts a 4.9% increase in housing prices this coming year.
In October, new home sales grew 18.9% to a seasonally adjusted annual rate of 667,000 units, the highest level since 2007. This came in the wake of the upwardly revised sales pace of 561,000 units in August. The quick surge was the largest since January of 1992. Previous August sales were reported at 560,000 units. Those navigating the housing market this year have seen a shortage of homes as well as skilled labor, and appropriate land. Sales of new single-family homes in the US moved unexpectedly to a more than 9.5 year high in the Northeast in September, hitting their highest level in close to a decade, while sales in the South did as well. With this sales surge, the inventory of new homes on the real estate market remained at 279,000 units, and it would take five months to get through the supply of houses currently on the market, down from the six months it would have taken in August. A six-month supply is viewed as a healthy balance, halfway between supply and demand.
Although there are many ways of forecasting and differing opinions do exist on what is to come in terms of a real estate forecast for 2018, one thing most forecasters agree on is that home prices will continue to increase. Where they differ at times, however, is just how much they will rise. While some claim a 3.65% increase, others indicate that home prices will rise by 5% by July of 2018. Neither prediction is bad news for real estate consumers, however, as both beat the substantial 2016 increase of close to 7%.
Hurricanes Harvey and Irma weighed on homebuilding in September and slowed down housing starts and related activity while hurting sales of previously owned homes in the South too. “The destruction caused by Hurricanes Harvey and Irma and the resulting disruption … are expected to be a drag on third-quarter growth,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “Nonetheless, the economy remains on track.” Many experts agree the real estate forecast for 2018 is promising.
Real estate opportunities persist
If you’re buying or selling, look ahead and check out some of the factors that will affect the housing market for the next five years. US home prices still reflect some of the hottest markets under the sun due to lack of houses for sale, a national problem that’s been in the works for years and is especially bad in California. However, with crisis brings great real estate opportunities for investors who put in the time.
November, all the way through to the upcoming spring real estate forecast for 2018 looks promising. The economy is solid, trade deals look good, new construction is active, and recovery from a slew of natural disasters is underway. Labor shortages and higher lumber costs are expected which could mean higher house prices and possibly fewer resale houses on the market. Homebuyers need to get creative to find ways to match their income and buying power with the high prices being sought out for houses for sale in very popular cities such as Boston, Los Angeles, San Francisco and the Bay Area, New York, Seattle, Denver, San Diego, etc. According to experts surveyed by Zillow, the US housing market power balance will shift from favoring sellers to favoring buyers by 2019.
Supported by stricter lending standards and a much more solid economic foundation, today's housing market is very different than it was before the “The Great Recession,” already over a decade ago. While home prices have returned to their previous booming levels, current price appreciation is driven by strong supply-and-demand dynamics with no signs of pre-recession era flipping or over-construction.
People want to buy in spite of prices
In spite of any risks involved, or high prices in some hot-market cities, many Americans are still extremely eager to buy real estate. The market is in good shape the national real estate forecast for 2018 looks good—in part because of this eagerness. Reasons for the persistent desire to own homes among Americans include: high rent prices, appreciating home properties, young millennials who have families, and Gen Xers re-entering the housing market after foreclosures.
Buying a home can be very stressful, particularly if you’re a first-time home buyer. It is likely the most significant purchase of your entire life, but the process is complicated, and can be highly overwhelming. Not to mention, unfamiliar lingo and unexpected expenses do arise. To make your first-time home buying experience easier and gain some helpful perspective, consult these 25 tips designed to help you navigate the process more smoothly, and save money as well.
City spotlights: Real Estate Forecast 2018
An economy on the mend means there’s no chance of a housing bubble burst and no crash possible according to many. Despite talk of housing bubbles, it’s a good time for sellers to put their houses up for sale, but on the tough side for home buyers and investors. Experts are predicting largely positive forecasts of markets from Los Angeles and San Diego to New York. For investors or buyers with less capital, the cities of Kennewick, Detroit, Fort Wayne, Modesto, Fresno, and Waco are offering the lowest prices on homes for sale.
Spotlight on California: Real Estate Forecast 2018
The most recent update on hot investment cities (cities with an average US-wide profit of $336,000) places San Francisco, California right at the top of the list. Sunnyvale and San Jose are up there too thanks to their very high rental prices, lack of housing, lack of land, and high levels of pay. But the Bay Area isn’t the only region with potential. Realtor.com named Vallejo, California the best city with the best outlook. Due to the fact that home prices in the nearby San Francisco and Bay Area housing market are so high, buyers are willing to wander a bit and look further to the North in Vallejo for much more affordable (and even cheap) properties.
California’s five-year run of rising home prices is expected to last another three to five years, with median house prices on track to beat the record highs set during the housing bubble, according to a Realtor economist. The California Association of Realtors forecast that home prices will increase an additional 4.2% in 2018, rising to $561,020. If the real estate forecast for 2018 proves right, existing single-family home prices will exceed the record high of $560,270 set in 2007. Prices, though, will still stay well below pre-recession records when taking into account inflation.
Spotlight on Chicago: Real Estate Forecast for 2018
According to National Association of Realtors Chief Economist Lawrence Yun, the Chicago area housing market should get stronger in 2018. The real estate research team at Zillow recently predicted that prices will continue to grow upward straight through the end of this year and into next. Their economists and analysts expect the median home value in Chicago to rise by another 3.2% over the next year. This prediction was issued in September 2017 and extends into September of 2018. As for the last 12 months, Zillow reported an increase of 7.9% for the median home value in Chicago. This means they expect house prices to rise more slowly over the coming months than they expected in the past. In many ways, the forecast for Chicago’s real estate market is very similar to that of the nation as a whole. Home price appreciation is expected to slow down in most cities over the next few months, and moving into 2018. Similarly, many cities across the country are experiencing a shortage of homes for sale, relative to demand. So you might say the Chicago housing market is simply expected. No big surprises there.