My Annual 10 Real Estate Predictions for the Coming Year

Last year was one of the most difficult to predict because of an election that was as unpredictable as the new president.

This year is also challenging because of the new tax law that has just been passed.

Despite the uncertainty of the effects of that new legislation…

Here are my 10 Annual Real Estate Predictions for the Upcoming Year:

1. Tax reform legislation will be amended this year and Congress will give back many of the homeownership benefits taken away in the original bill. The National Association of Realtors (NAR) will need to use its political lobbying muscle to achieve this goal.

2. Mortgage interest rates will be on the rise this year and inch up to 4.75% by year end. I was wrong on this one in 2017, but who wasn't?

3. The economy and the housing market will continue to grow. Job creation is at record levels, unemployment is at a 17-year low and wages are feeling upward pressure.

4. Millennial buyers will be one of the biggest influencers in the U.S. housing market this year and they will start buying more expensive homes. They are getting older and further into their careers, enabling them to save more money and raise their credit profiles.

5. In many areas demand will continue to exceed supply, but an increase in inventory will help take some heat off the market. Expect home prices to rise, but at a moderate and reasonable rate (5%).

6. Expect homebuilding to continue at a steady pace this year. Many builders will shift to less expensive homes and condominiums, providing new construction to a larger pool of buyers and, as a result, more and faster sales.

7. Foreign investors will still find high-end American real estate appealing because of economic turbulence in their home countries. That section of the market is still primarily all cash – people buying up expensive properties because it's a safer investment here than in their own countries.

8. Baby boomers will continue to move in 2018. A great many are continuing to downsize, moving to warmer climates or moving to be closer to their children or grandkids.

9. 2018 will be a great year for first-time homebuyers. With rents continuing to rise faster than incomes, many Millennials will be looking to buy homes of their own.

10. On the commercial side, expect multifamily and industrial properties to experience positive growth. While speculative construction of big industrial space has returned, the problem is that there's only so much land where more can be built. Even so, the cost to own buildings compares favorably to leasing in many situations.

Overall, improving economic factors will provide more people the needed income to buy. We are seeing positive job growth. Job growth creates housing growth. Housing growth means prospective buyers will be able to ditch renting in favor of buying.

So, all in all, 2018 should be a good year... at least partially dependent, of course, on the legal and political outcome of certain investigations and elections. But consequences resulting from those issues are not likely to influence the housing market until next year. I hope.

Best wishes,

Jay

Jay Burnham is a Premier Associate at Coldwell Banker Residential Brokerage in Beverly. He is a past president of the North Shore Association of REALTORS and was previously the Association’s REALTOR of the Year. He has been a real estate broker for 36 years and has sold more than $350 million of residential and commercial real estate. He lives in Hamilton with his wife and business partner, Linda Morey. Contact them for your real estate needs or questions, online at www.NorthShoreRealEstate.com, or call them direct at: 978-578-5590.