Predictions for the 2018 Real Estate Market

Ringing in the new year always calls for a look ahead at future housing market trends. With 2018 fast approaching, experts say buyers and sellers should be prepared for a bit slower home growth, a continued inventory shortage, and evolving designs. While none of the forecasted themes are breaking news, the challenge continues for middle-income buyers, empty nesters, and millennials -- due to a shortage of options suited just for them. That said, if buyers are open to getting creative, there’s always a pathway right to their dream home.

By the Numbers

How do the numbers stack up? Home sales will still be on the upswing, nationally, predicted to rise by about 2.5%, according to Realtor.com. As for new construction, that’s supposed to increase by almost three times the rate – good news for those looking to step into a turnkey space.

Home prices will continue to edge up, but at a slower rate than in previous years – at roughly 4% in 2018, says HousingWire.com.

As for mortgage rates, they’re expected to climb a bit, as well – to an average 4.6%, with a 5% lock for a 30-year-fixed-rate mortgage. These statistics point to a still-stable economy, and positive growth from real estate transactions.

In keeping with trends, many millennials will enter the market, many them first-time buyers. They’ll be looking for affordable homes, and will want them move-in ready. Since that’s a tall order in the current market, they’ll be well-served looking for fixer-uppers, or more dated homes that need renovation. There are some great buys out there if they keep their options open!

Great Time to Sell but Nowhere to Go?

The lack of listings will still impact empty-nesters next year, who often stay put due to the challenge of downsizing effectively. Either it’s tough to find a smaller home in the same neighborhood, or cost-prohibitive to purchase a condo in downtown Boston. Some want the same-sized home but a different floor plan – and developers are listening, with more options coming soon.

Many older sellers will make their home sale contingent on their ability to find a new one. However, there are still choices for this population – including town homes in suburban areas, or rentals in communities where they might want to permanently reside.

Running the Market

Millennials will continue to drive the market -- creating new home designs that suit their lifestyles – like “rustic tech-chic, the use of natural materials, and lot of color and artistic accents. According to Zillow, more than ½ of homes for sale now are in the top third of home values, making it tough for these Gen Y-ers to find the hassle-free homes they want in the neighborhoods they desire. They will take one of two paths – towards a new or updated home is a less tony neighborhood, or a home in a more expensive town that might need extensive work. Those millennials willing to invest time, money and sweat equity into an older property will see a pay-off in the end.

Note to Sellers

If you’re planning to list your home in 2018, be sure to start the process now. A strong fall market now should give way to a burgeoning spring market that starts long before the snow melts. Sellers of older homes should cater to millennials because of their buying potential. Making some basic updates with new appliances or “smart home” features will gain traction with this buyer pool. Consider an energy efficient audit and the use of solar panels, if applicable. Should your home be in a high-end neighborhood, consider the competition in this luxury tier, and set a realistic price.

Note to Buyers

Keep your options open in 2018. The market will start to balance out. If you’re willing to put work into a home, you’ll have more properties to pick from. Developers are building all over Metro-West, and inventory will start to open up. If you can take the time to do your homework and not rush into a purchase, you’ll be ahead of the game.

The bottom line is, 2018 will be another hot year for real estate. If you’re about to buy, sell or build, consult a seasoned realtor for the most up-to-date information, trends, and statistics. Working with someone who has their finger on the pulse of the market will make all the difference.