By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC
A decade ago, many Americans experienced a crippling housing crisis. Mortgage payments could not be met, thousands of homes foreclosed, and millions lost their jobs.
The housing market has been in recovery mode since and 2017 was a year of success – but what will 2018 bring? Could we be on the verge of another bubble?
According to Forbes, last year’s housing market saw inventory tighten, prices rise, mortgages steady, and new home construction increase.
While the housing market has regained its strength, here are six things experts expect to happen:
1. Home sales will slow – but not for long
Provisions in the new tax bill will directly impact housing – changes to the mortgage interest deduction and property tax deductions. Experts anticipate households will take time to consider how the tax legislation effects them before making any big moves. Underlying demand should remain strong (pent-up demand from renters) after the best year of wage growth since the recession.
2. Inventory Shortage
A lack of inventory remained the defining trait of the housing market in 2017. Low inventory drove bidding wars across U.S. housing markets. In 2018, experts’ general consensus is inventory will pick up slightly – opinion being the current situation is unsustainable. Prices cannot rise faster than wages forever.
- Price growth will slow—but not stop
National home prices have climbed for 23 consecutive months. The hottest markets last year were western cities like Seattle and Las Vegas where closing prices rose 12.7 percent and 10.2 percent. Experts say prices will continue in 2018, but the rate of increases will slow.
- Renting vs. buying
New tax legislation makes it more expensive to own a home in high tax and high price locations. The changes, combined with rising prices, could mean renting makes more financial sense compared to buying. High rents and student debt loads have also made it difficult for young households to save for a down payment even if they can afford a monthly mortgage.
- Mortgage rates will hover around 4 percent
Experts tend to agree mortgage rates will finish the year between 4% and 4.5%. That’s slightly higher than the rates for most of 2017 but still historically low.
- Millennial demand for housing will rise
Millennials have been slow to enter the housing market. A growing share of them are now buying houses after getting married and starting a family. Single millennials are more likely to own a home than prior generations of singles.
- 20 Feb, 2018
- Summit Consumer Receivables Acquisitions, LLC