Happy fall! With Thanksgiving around the corner, it’s a good time to think about how the 2017 housing market has done and take a sneak peek into predictions for 2018.
How will the housing market look at the end of 2017?
According to housing experts, despite record sales in 2017, the year is expected to close with sales a touch lower than had been predicted at the start of the year. However, analysts project that 2018 will boast sales increases even higher than those of 2017.
Lower than expected national sales for 2017 are being attributed to Hurricanes Harvey and Irma. Potential buyers and sellers in Texas and Florida had to put major life changes on hold while helping their communities recover from these natural disasters. However, the good news is that as recovery occurs, home sales and purchases that had been put on hold will resume, likely impacting sales in 2018.
Experts agree that 2018 will bring an increase in sales:
- Economic teams for Freddie Mac, Fannie Mae and the Mortgage Bankers Association who examine the housing inventory expect to have higher sales in 2018 than 2017.
- The National Association of Realtors projects a 6.9 percent increase in sales in 2018.
- Over 100 experts surveyed by Home Price Expectations expect a house purchased at $250,000 this past January to increase in value almost $50,000 over the next five years.
Is another bubble forming?
Homeowners and prospective homeowners who experienced the housing bubble of 2008 tend to be gun-shy about housing price increases, worrying that home price increases indicate another bubble forming. They delay buying a new home, afraid of a bubble popping and impacting the value of their home.
Current housing price increases, however, are not attributed to a housing bubble. Rather, rising sales prices are correlated with low inventory. Fewer homes on the market increase demand and cause housing prices to rise.
Why is demand so low? It’s become a bit of a circle. Homeowners who are considering selling their homes and purchasing a new home are not seeing a lot of homes on the market. They are concerned that when their home sells, they will have trouble finding a new home. Therefore, they delay putting their own house on the market, reducing inventory.
Of the agents and title representatives surveyed by First American, 47 percent report that the biggest reason for low inventory is that existing homeowners are worried that they will not be able to find a home to buy.
If you are considering selling, do not let fear of low inventory impact your decision. With the Mittelstaedt Team at your side, you will find the home of your dreams with our customized search process—a process that goes beyond watching the MLS for listings and includes agent networking and other unique methods for uncovering potential future listings.
If housing prices are continuing to rise, does that mean I should hold off on buying a new home?
No. For two reasons. First, housing prices are continuing to increase, which means buyers should buy before the prices go up further. Secondly, interest rates are lower than they were in the recent past, and buyers should take advantage of that before interest rates increase.
What if I do not have enough equity in my home?
The good news is, you may have more equity in your home than you expect. Homeowner equity reached eight trillion dollars in the second quarter of 2017, which is more than double the level just five years ago. The rapid rise in homeowner equity not only reduces mortgage risk, but also supports consumer spending and economic growth. Homeowner equity doubled the level it was just five years ago. While over 80 percent of homeowners have significant equity in their home, less than 40 percent are aware of their true state of equity.
What is your equity situation? Is this the right time for you to considering buying and/or selling a home? Contact The Mittelstaedt Team today. We can help you find the answers you need.