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What to Expect in 2018 Concerning the Real Estate Market in the US

The year 2017 was a year full of lessons for Americans, and the ultimate takeaway from the entire year was to expect the unexpected. It doesn’t matter whether the context you are taking is in housing, sports, weather, or politics. The housing market didn’t have a strong year, and proved to be volatile and unpredictable. There were predictions of an increase in interest rates, construction would also see a surge, and the growth in price would be moderate.

However, none of that came to pass, as the exact opposite happened, and the real estate market got hotter than anyone anticipated. It resulted in prices increasing, inventory tightening, and mortgage rates remaining budgeted. There was an increase in new home construction towards the end of the year, but in general the market looked disjointed. Going by what happened last year, nobody is counting their chickens about what to expect in 2018 concerning the real estate market in the US.

Now, I have been in the real estate industry for more than 27 years, and have seen some catastrophic years for the market, aside from the big crash. Yet, even I can’t predict what 2018 has in store, but there are some things, I expect will happen in 2018.

  1. Inventory will drag

    The defining characteristic of the real estate market last year was a shortage of inventory, which wasn’t what experts had predicted. The housing inventory fell by 10.5%, and there were only 653,347 homes for sale, which was less than the previous low of 967,604 in November 2010. Looking at the 2018 market, experts expect inventory will continue to drag, as homeowner don’t want to sell property.

    Whenever inventory drags, it results in construction picking up, but that has failed to materialize as well. The assumption that strong prices and demand will result in construction becoming favorable, isn’t getting a reaction, and there are structural reasons for that. Builders don’t want to deal with local regulations against density, lack of buildable space, on top of the high cost of building material, skilled labor, and land.

  2. Sales will be slow

    President Trump has added provisions in his tax bill, which will have a direct impact on the housing market. The changes will affect property tax deductions, mortgage interest deductions, and how much money people spend on real estate. Experts are anticipating people will try to figure out how the tax plan affects them, and their home values, before they decide to sell or buy. This will result in sales being slow in the early part of the year, but they should increase by the end of the year.

  3. Renting is more attractive

    The new tax law doesn’t work in favor of homeowners, since it has become more expensive to own a home in places with high tax and high prices. All these changes, combined with rising prices, means that people will figure out that renting is better than buying. The prices of homes are rising faster than inflation, salaries, and wages, and this is causing problems for home buyers.

    This problem is compounded when you look at the bigger picture. It shows that student debt loans and high rents have made it difficult for young people to save enough money for a down payment, even if they can afford the monthly mortgage payments.

  4. Price will continue to grow

    The prices of homes nationally have increased for a consecutive 23 months! The Case-Shiller U.S. National Home Price Index jumped by 5.92%, which showed the biggest gains in the market since 2013, when the market was recovering from the crash. The fastest growing markets last year were in Las Vegas and Seattle, where prices rose by 10.2% and 12.7% respectively.

If you want to learn more about what 2018 has in store for the real estate market in the U.S. check out my YouTube page, and visit today.

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