The fast-rise in house prices exacerbated by tight inventory could start to ease in 2018
The fast-rise in house prices exacerbated by tight inventory could start to ease in 2018.
A report from realtor.com forecasts that next year will see an easing of home supply shortage and a more manageable rate of price growth. Sales are expected to rise at a modest pace.
While this is good news, relief for first-time buyers is expected to take longer due to the significant reduction in available supply. Inventory challenges for starter homes will mean prices outpacing other housing types.
"Next year will set the stage for a significant inflection point in the housing shortage," said Javier Vivas, director of economic research for realtor.com®. "Inventory increases will be felt in higher priced segments after spring home buying season, which we expect to take hold and begin to provide relief for buyers and drive sales growth in 2019 and beyond."
The report highlights five key trends for 2018:
"Millennials are a driving force in today's housing market," added Vivas. "They already dominate lower price home mortgage and are getting close to overtaking older generations for mid- and upper-tier mortgages. While financially secure in general, their debt to income ratios have started to increase as they compete for higher priced homes."
A report from realtor.com forecasts that next year will see an easing of home supply shortage and a more manageable rate of price growth. Sales are expected to rise at a modest pace.
While this is good news, relief for first-time buyers is expected to take longer due to the significant reduction in available supply. Inventory challenges for starter homes will mean prices outpacing other housing types.
"Next year will set the stage for a significant inflection point in the housing shortage," said Javier Vivas, director of economic research for realtor.com®. "Inventory increases will be felt in higher priced segments after spring home buying season, which we expect to take hold and begin to provide relief for buyers and drive sales growth in 2019 and beyond."
The report highlights five key trends for 2018:
- Inventory growth – the first year-over-year rise since 2015 expected in the fall, mostly in mid to upper tier sectors. Boston; Detroit; Kansas City, Mo.; Nashville; and Philadelphia will see recovering supply first.
- Slower price growth – down from 5.5% in 2017 to 3.2%; driven by higher priced homes.
- Millennials to grow mortgage market share – this will be across all price segments despite challenges from interest rate rises. Millennials could account for 43% of homebuyers taking out a mortgage in 2018 (up from estimated 40% in 2017).
- Southern markets will dominate sales growth - Tulsa, Okla.; Little Rock, Ark.; Dallas; and Charlotte, N.C. expected to lead with 6% gain compared to 2.5% national average.
- Tax reform wildcard – whichever way Congress goes, there are likely to be negative impacts for homeownership.
"Millennials are a driving force in today's housing market," added Vivas. "They already dominate lower price home mortgage and are getting close to overtaking older generations for mid- and upper-tier mortgages. While financially secure in general, their debt to income ratios have started to increase as they compete for higher priced homes."
