2018 Real Estate Market Forecast

2018 Real Estate Market Forecast

2017 was certainly an interesting year! We had more buyers, and looser mortgage guidelines, qualifying more people for a home loan. We still maintained incredibly low interest rates with noisy politics and uncertainty contributing a great deal to that. As supply and demand would have it, we saw an increase in demand for home ownership but a shortage of supply as low inventory was the only thing holding the housing market back from a sure explosion. That led to home values increasing and a shift from a buyers- market; to a sellers- market.

So here we are its 2018 and we are seeing incredible economic growth. The Dow Jones Industrial average is soaring to record levels, unemployment rates are at a 17-year low and job growth predictions are all leading to signs of a very healthy America in 2018; from an economic perspective.

So what does all of this mean to you? Well it’s always important to know what is going on in the real estate market because if you are a home owner, you should always know the current market value of your home. If you are considering selling, you of course want to know how much cash you can get out of your sale. And if you’re looking to own a home, you want to know what the interest rates are, what they are projecting to be and what the inventory situation looks like to make better, more informed decision.

It’s expected that historically low interest rates, still baffling to even the most seasoned analysts, will gradually rise to an average of 4.5% percent over the next 12 months. Inventory is expected to increase, but moderately; making 2018 thus far, a sellers- market.

“This will be the first of many years to come in which it’s all about the millennial first-time homebuyer,” said Mark Flemming, chief economist at First American Financial Corp, a title insurance company. “ Find ways to appeal to those buyers, and it’s likely to be a successful year.”

Millennials, first time home buyers and self-employed individuals finally have access to options they really didn’t have after the mortgage meltdown. Let’s face it, most rentals today aren’t as desirable and they are more expensive as sellers of nicer properties have opted to “cash out” and sell once the market recovered. What I have recommended to interested buyers in our community is define where you are at financially and what your credit score is; then learn what products exist today that will get you qualified. For my sellers or potential sellers, get a free market analysis and know the market value of your home; you might be pleasantly surprised.

Mortgage Interest Rate Prediction for remainder of 2017

Mortgage Interest Rate Prediction for remainder of 2017

Stock Market Thermometer Rising Values Making MoneyInflation is a key indicator for where mortgage rates are headed.  In simple terms, when prices of goods and services go up, investors of mortgage backed securities lose return.  That is why when prices rise, so too do interest rates.  The last report on inflation saw a slight drop; from 1.8% to 1.4% from January to May.   With three jumps in interest rates this year, many projected a steady increase, but recently mortgage rates dropped slightly.  While I’m not a prognosticator of interest rates, all signs from here to about December 2017 look like they will remain very low, perhaps even a slight decrease.  That is good news for borrowers; especially the huge number of millennials that are taking advantage of low down payment mortgages and looser credit guidelines.

Inventory is getting better.  After three consecutive months, pending home sales reversed course in June in all major regions of the United States with the exception of the Midwest.  Almost all regions saw an increase in contract activity according to the National Association of Realtors®.

How about some more good news?  As I’m writing this blog the Dow Jones Industrial average hit a record high, approaching the 22,000 mark; powered largely by Goldman Sachs, JP Morgan Chase and a few others.

The economy certainly is showing signs of legitimate growth built on the right foundation.  Unemployment numbers SHOULD be next to improve and if and when that happens, we should see a solid run of economic prosperity.

If you are considering a real estate purchase or are considering getting a mortgage, now is a very good time to act.  You have to simply balance the prices of real estate and interest; but when you look at an amortization schedule you quickly place the value of low interest rates over slightly higher real estate prices.  Please let me know if I can help you in any way or if you simply have any questions you need answers to.