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There’s good news and bad news when it comes to real estate trends for 2018.
First, the good news: Home sales are expected to stay hot through next year, and sellers are in a position to unload their homes at a profit.
Now, the bad news: Demand far exceeds supply, and buyers will have to be competitive and motivated to snatch a home this year.
Whether you’re thinking of buying or selling a home in 2018, we have the tips you need to come out ahead in this tough real estate market. Here are four upcoming real estate trends you need to know about.
1. Home sales are expected to soar.
According to the National Association of Realtors, this year the number of existing-home sales was expected to increase about 3.5%, to 5.64 million. The NAR predicts that existing-home purchases will rise another 2.8% in 2018, to 5.8 million.(1)
With homes continuing to fly off the market, buyers might have to compromise slightly on their list of “must-haves,” like favorite neighborhood, commute time, price, and size of home. If you’re planning to buy a new home in 2018, give yourself a competitive advantage with the following tips:
Get your financing in order. Of course, Dave recommends the 100% down plan, but many can’t pay cash for their home. If you’re looking to finance, get pre-approved for a 15-year fixed-rate mortgage. When sellers review your offer, a pre-approval will show them you’re a serious buyerbecause you and your lender have already started the mortgage process.
Save a competitive down payment. Plan to put at least 10% down on your new home at closing. However, 20% is even better because you’ll avoid paying private mortgage insurance (PMI). The more you can put down, the less money you’ll need to finance—and that adds up to a lower mortgage payment each month. Plus, the more money you bring to the table, the more serious you look to the seller. So, bring on the cash! Know what you want in a home. Knowing what you want in a home is half the battle in finding the right place. If you’re buying a home with your spouse, make separate lists of must-haves and compare. Once you’re on the same page about what you’re looking for, share the list with your real estate agent and use those criteria as the foundation of your home search. You’ll be able to move faster with an offer once you find the house that meets most—if not all—of your requirements.
Include a personal letter with your offer. Nashville couple Abby and John B. said they believe this move is the reason their offer beat the stiff competition. “We sent the sellers a personal letter with our offer,” Abby said. “The best thing you can do is to include in the letter things you love about their house. If they have a deck or screened-in porch, tell them how you envision using the space. We did that and the sellers accepted our offer—out of multiple offers—within 24 hours.”
Hire the best agent possible. In a hot market, your agent could make or break a deal. You’ll want a seasoned agent who has a great reputation in the real estate community. The right agent will answer questions you didn’t even know you had about the buying process. You’ll need an expert negotiator who also knows how to manage the details of paperwork and closing, so stick with a pro. After all, your home is likely your biggest financial asset so you’ll want to make the most of your investment.
2. Home prices will rise slightly.
According to the Home Buying Institute (HBI), housing market forecasts through 2018 suggest home prices in the U.S. could rise somewhere between 3% and 5%. The HBI considers this normal growth from a historical standpoint, as home prices over the past 30 years have tended to rise 3–4% annually.(2) As home prices increase, buyers should evaluate just how much house they can really afford, and stick to those boundaries. Don’t let the pressure of the hot housing market make you pull the trigger sooner than is financially reasonable. If the housing market is more expensive than your budget allows, consider these options:
Save longer. Even if you’re debt-free with an emergency fund in place, you could live in an area where your income truly can’t support the price of a mortgage. Don’t sweat it. Renting helps you build up your savings—and patience. Waiting may be your smartest move if you want to buy a home in an expensive market.
Reset your expectations. As home prices continue to rise, you might have to revisit your criteria. It might be hard to give up a luxury master bath or gourmet kitchen, but bypassing those extras will be worth it to avoid getting in over your head. Look for the least expensive home in the best neighborhood you can afford and upgrade over the years—at the speed of cash, of course. In time, you could have your dream home!
Broaden your search. Home prices are usually higher the closer you are to a city. To compensate for this, try looking at houses just outside the city. An expert real estate agent will help you determine an area of town that could fit your budget and lifestyle.
If you need help figuring out how much house you can afford, use our free mortgage calculator to estimate your monthly payment.
3. Boomerang buyers will re-enter the housing market.
The National Center for Policy Analysis estimates that as many as 10 million Americans were forced to foreclose on their homes during the housing bubble.(3) The waiting period after a foreclosure is seven years, starting from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower.(4) This means around 1.5 million Americans are now eligible to re-enter the housing market.(5)
Bottom line: the market has more demand than supply. This is great news for home sellers, and not-so-great-news for home buyers.
4. Hot markets will get hotter.
According to the “Emerging Trends in Real Estate 2018” report, Seattle takes the top spot among U.S. markets thanks to job opportunities, a diverse economy, and an educated workforce. Austin moved from first to second, and Salt Lake City (third) and Fort Lauderdale (sixth) entered the top 10 for the first time in the study’s history.(6) Check out the top 10 hottest markets for 2018:
Salt Lake City, Utah
Raleigh/Durham, North Carolina
Dallas/Fort Worth, Texas
Fort Lauderdale, Florida
Los Angeles, California
San Jose, California
Buying or selling in 2018? Start by finding the best agent.
No matter what 2018 brings to the housing market, don’t try to navigate the unknown waters of buying and selling on your own. Reach out to one of our real estate Endorsed Local Providers (ELPs). They’re professionals in your area who’ve earned Dave’s seal of trust for providing excellent advice and outstanding customer service.