Every year brings new and shifting trends for the industry based on an ever-changing real estate market. As 2017 came to a close, there are a few obvious patterns on the horizon for what you can expect as a real estate professional this year.
Real estate is transitioning as millennials come to age as the largest and most frequently shopping generation. That being said, the millennial generation puts a larger emphasis on the here and now and a smaller focus on planning for the future with big purchases like buying a home. Higher rents and less affordable housing options only compound the problem. In addition, millennials tend to marry later in life, which typically precedes purchasing a home.
While the majority doesn’t appear to be in a huge hurry to buy, Trulia predicts a slow but steady rise in the homeownership rate. Last year, many areas faced an empty real estate market as people hung onto their properties. Now as home prices continue to rise many expect it to encourage more people to at least consider selling. A growth in inventory also means the number of sales could increase. As described on MarketWatch, “Resales of existing homes are expected to rise modestly in 2018. The median estimate is that existing home sales will rise 2.5%, to 5.6 million units.” In addition to housing values, interest rates are expected to rise.
The new tax bill reform poses a few new pros and cons for the industry. It gives more money back to the upper-class which is expected to increase vacation home purchases. More expendable income encourages people to invest in the market and their lifestyle. Cabins and beach houses are a great way to do both. As Glenn Phillips explained to The Street, “Economic optimism will fuel this sector of the real estate market.” It’s not all roses though. Lawrence Yun described to Paul Davidson from USA Today that “The tax bill also caps the mortgage interest deduction at home values up to $750,000, down from $1 million, for homes bought after Dec. 15. The change will likely deter some high-end home purchases, particularly in California.”
A strong economy tends to be a positive omen for the housing market. While all these factors cause flux in the market, as things settle this hopefully signals a settling for the better. In the end – timing will dominate the market this year. Given the consistent and vast changes taking place, knowing when to buy and when to sell proves pivotal in 2018.