5 Things To Know About 2018′s Housing Market
Are you thinking about buying a home like our latest listing in Beverly Hills (pictured here)? If so, you’re not alone. Here’s an overview of 5 things you need to know about the housing market in 2018:
1. U.S. Home Price Trends…It’s been a good decade for home prices. After the housing market crash that started in 2008, we’ve seen a steady climb, with some markets rising faster than others. Over the last 2 years, home prices have been rising about 5% to 6% per year on average, according to the Case-Shiller Index. While no one can predict the future, we think it’s quite likely that home prices will continue to rise gradually in 2018.
2. Price Trends By City…There is always a lot of variation from one city to the next when looking at home prices, and that is certainly true today. For example, since 2011, West Coast markets like Seattle, Portland, San Francisco, Los Angeles, and San Diego have incredibly high home price appreciation. On the other hand, East Coast cities like Boston, New York, and Washington, D.C. have seen relatively lower appreciation.
3. Supply and Demand Economics…The appreciation we’ve seen has made this a challenging time for prospective home buyers in many markets, including those who already own a home. With a greater portion of homes out of reach, more people are opting not to “trade-up.” The lack of inventory makes it a difficult proposition even for those who can theoretically afford to buy a home.
4. Credit Constraints for Consumers…The aftermath of the crash brought new regulation and a changing mood in the lending industry. Mortgage lenders scrapped the looser lending criteria that had prevailed in the run-up to the housing crash and tightened their lending criteria. This has significantly curtailed the number of prospective borrowers who can be approved for a loan.
5. Mortgage Interest Rates…Many people expect mortgage rates to increase in 2018 as the Federal Reserve continues to tighten monetary policy and implements the plan to reduce its balance sheet. However, the increase in rates has been predicted for some time and it’s not clear when it will actually occur. Interestingly, mortgage rates have floated in a pretty tight range since 2011.
No one can predict the future, but we can make educated guesses about what will happen to the housing market in 2018. If you’re planning to buy a house this year, you should feel comfortable knowing that it is not a bad time to go for it.