While it's impossible to know for sure, experts analyze current trends to predict what may happen.
Home prices and values are expected to rise modestly:
Home prices have been increasing around the country. While the National Association of Realtors anticipates 2018 home prices will rise by 3.5%, Freddie Mac predicts they'll increase 4.5%. This percentage may seem modest, but for some cities, rising home prices may continue the 2017 trend of creating more pressure in the market. The good news is home values in 28 states have risen to above pre-crisis peaks and are at an all-time high.
Rental prices are no longer increasing at the rate of home prices in most areas. Although the leveling off of rental prices may take some financial pressure off renters, for those thinking of buying, it's a good time to turn their dream of homeownership into reality.
Existing home sales have leveled off for now:
Experts predict 2018 will spell more of the same for home sales. Many believe this is due to the increase in interest rates in 2017, which may have reduced the purchasing power of many homebuyers. Home purchases are expected to rise a modest 2.5% (5.8 million) in 2018.
However, patience may pay off for potential buyers. While the combination of economic recovery, comparatively low mortgage rates and job growth may have brought more interested buyers to the market, inventory has been tight over the last few years. In response, homebuilding has been up and new homes are expected to hit the market this year, increasing inventory for potential buyers. Many experts are predicting 2019 will be a buyer's market in many areas.
Will 2018 be a banner year for new homes?
Many experts predict that new home sales will drive the market in 2018. A total of 1.33 million housing starts are expected for 2018, an increase from 1.22 million in 2017. While total home sales are expected to increase over 2%, new home sales are expected to increase 8%, reaching 670,000 sales.
What about mortgages?
Although mortgage rates may have increased slightly, over the last few years, rates have remained at historically low levels. Freddie Mac, the Federal Home Loan Mortgage Corporation, predicts an increase in the volume of mortgages, which follows other predictions that signal an increase in home sales.
Why learning about the real estate market matters (even if you're not currently in the market for a home):
1. The health of the local market influences the value of your home. Higher home prices in your local area mean that your home may also be worth more. Since real estate is local and can vary from city to city, even across neighborhoods, the more you know about the market, the better equipped you are to understand the value of your home.
2. Make the right decision if you're thinking about buying or selling later in the year. People move for many reasons, one of the most common is a change in family situation. So staying up-to-date on the local market will help you better understand if it's the right time to buy or sell. Also, if you find yourself wanting to upsize or downsize in the future, it'll help you decide whether you should turn your property into a rental.
3. Get the full economic picture. It's no secret that real estate plays an important role in the health of the overall economy, but national statistics only give you a portion of the story. Learning more about the local market will help you understand the economic and market trends we're experiencing here.