Outlook for Housing & Mortgage Market for 2018

Housing OutlookInterested to know what’s expected for the new year in terms of real estate and mortgage rates? Me too! I’ve been reading up on what the experts I respect see happening in the new year and one foundational theme I’m seeing is that we could see some shifting and changing in housing and mortgages in 2018. We’re expecting important changes in: inventory, price appreciation; as well as generational and regional shifts. And read on if you want to know how you can capitalize on these trends.

From a 30k foot view, it looks to be a robust year for home sales as inventory increases. Predictions are that in 2018 home sales are on pace for the best year since 2007! Mortgage rates are predicted to rise to near 5.0 percent; yet this will have little affect on home buyers as new mortgage are expected to rise 7.3 percent. Also rising will be home appreciation, expected to grow 4.9 percent in 2018. So, all-in-all its an excellent time to be a home buyer or seller! For more discussion on these trends, read on…

Trend #1: Changes in inventory will release pent-up demand for housing

Economists at Realtor.com are predicting that housing inventory will remain tight through the first quarter of 2018. But then we’re expecting to see some increasing inventory levels and when we do it’s probable that we’ll see lots of home buyers that have been sitting on the sidelines start to move into the market, applying for mortgages, shopping for and buying homes. Freddie Mac’s economists predict that the relief in inventory will come largely from new build homes being added to the market; and inventory will be added from the top tier pricing down, so inventory in $350,000 and up will happen first.

Trend #2: Impact of Millennial Generation Increasing

The Millennial generation is the largest single generation in the history of our country. As they enter their 20s and 30s in greater numbers they will become the greatest percentage of home buyers in 2018 as their jobs improve, incomes grow, and student loan debt gets paid down. Realtor.com reports that Millennials are expected to be 43 percent of home buyers applying for a mortgage in 2018. This growth in home buyers with mortgages will spur a robust new house building boom in 2018.

Trend #3: Mortgage rates to rise, albeit slowly

Economic trends, including increasing economic strength and job growth, inflationary pressure, and the Fed raising rates and scaling back its purchase of mortgage backed securities throughout the year are expected to urge rates steadily higher in 2018. Despite the slow rise in rates expected, the Mortgage Bankers Association expects purchase mortgage originations to rise by 7.3 percent over 2017. They also say refinancing will decrease while more home owners will access home equity.

How can you use these trends to your advantage in 2018?

First, if you are planning on selling your home this year, January is a great time to get it on the market. Home buyers will begin researching homes and getting pre-approved for mortgages early in the year so they can close and move in the Spring and Summer. Buyers can take advantage of low competition and likely lower rates early in the year to increase what they can afford.

So, if listing your home or buying a home is on your radar for 2018, give me a shout and I can help you put a plan together for your financing to make the most of these 2018 trends.






Freddie Mac

Mortgage Bankers Assn.