After a year of rising home prices, low inventory levels and ongoing homebuyer demand, these conditions will increase even more in 2018.
As the year begins, one expert breaks down some of the major trends to come in 2018, saying the year will bring an abundance of positive trends.
“Turn up the volume on new home building,” Re/Max Co-CEO Adam Contos said, citing housing starts that are down 2.9% year-over-year and well below the historic 50-year average. “We’d love nothing more than to see the next generation of homebuyers start building equity now.”
Contos gives these four predictions for 2018:
1. Inventory is key
Contos explained that the volume on new home building will increase, but until that happens, the market will struggle with low inventory and some markets will feature all-out bidding wars. In 2017, housing starts were down 2.9% year-over-year and well below the historic 50-year average. Even though there’s a shortage of labor and a spike in material costs, the primary reason for the low starts is that builders have focused on more profitable, higher priced homes and multi-family residential construction. But now, at the end of the year, single-family homebuilding and permits began to surge, he pointed out, saying he would like to see that trend continue.
2. Existing home sales on the rise
Fueled by renewed consumer confidence, wage growth and an improving economy, existing home sales could increase and may even surpass record levels set back in 2006. However, any negative impacts on the stock market, even tighter inventories, a repeat of 2017’s devastating hurricanes and fires or even the recently signed tax reform bill could slow down home sales.
3. Changing migration patterns
Home buyers discouraged by affordability and low inventory in certain cities, markets and states, will look to other, more attractive and more inviting neighborhoods. Contos said he expects to see more home sales in the suburbs, less-populated markets and even more affordable states. Cities that have the most effective transportation systems and those that promote high-amenity, “walkable,” contemporary neighborhoods will benefit the most.
4. Always the unexpected
Gadgets, apps, online tools, real estate agents and technology – anything that makes buying and selling a home more plausible and less stressful will continue to launch and evolve, especially in 2018. He predicted consumers may not use bitcoins to buy a home tomorrow, but that could be in the future.
“We’ll certainly see our share of challenges in 2018,” Contos said. “But with the challenges will come ecstatic home buyers and sellers, new and booming communities, one boasting the new Amazon headquarters, and fresh innovations in real estate that we never saw coming.”
To see more forecasts for 2018, click here.