The housing market has changed a lot in the past year alone, and now experts have even more predictions for what the year to come may hold. These forecasts are certainly something for real estate professionals to track carefully because the emerging trends seen in the market even now will have a big impact on the way these professionals complete day-to-day work months down the road.
The good news is that consumer appetite for buying homes isn't likely to wane any time soon, according to the mortgage-backing giant Freddie Mac's projections for the 2018 housing market. Home sales are expected to rise by about 2 percent - a slight step backward from 2017's projected 2.8 percent - growing to about 6.3 million nationwide. This prediction comes despite the fact that mortgage rates are projected to average about 4.4 percent over the course of the year.
Digging into the numbers
It's worth noting 2017's mortgage rates didn't come close to averaging the 4 percent Freddie predicted last year, and that home affordability could potentially stay higher than expected as a result. Along similar lines, it's believed home prices will increase by about 4.9 percent over the course of 2018, representing a slower growth rate than this year's 6.3 percent.
In fact, Freddie notes that next year's projected growth would be one of the lowest levels seen since the turn of the century (excepting the recession years, when prices dropped significantly). Moreover, home purchases are expected to become a much bigger driver of housing market activity overall simply because rising rates will likely lead to fewer refinances. In fact, the 75 percent share for purchases, which will certainly keep real estate professionals busy throughout next year, would be one of the highest levels seen since the beginning of the 1990s.
Taking another look
Meanwhile, a panel of industry experts surveyed by Zillow noted they think home prices will end 2017 having risen nearly 5.1 percent, pushing the average home to a property value of more than $204,000 in December. That figure beat the predictions laid out before the start of the year, when the panelists projected home price growth of just 3.6 percent.
Zillow's data suggests that the $200,000 threshold, which was passed in June, is the highest ever observed. But for 2018, panelists likewise predicted a slowdown in the growth rate of overall home values, even as buyer demand remains high and inventory stays somewhat constricted. Nonetheless, the panelists projected home price growth from 2018 to 2024 averaging about 3.4 percent annually.
With these issues in mind, it's important for agents to do all they can to encourage more current owners to sell (when possible) and assuage what could be mounting concerns among would-be buyers. Even as prices and mortgage rates rise, they're still likely to present more affordability than the pre-recession market. Along similar lines, the more people can do to get into the market as soon as possible, the better their chances for locking in higher affordability.
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