We’re already fast approaching the mid-way point of 2018, and there are some trends in real estate that have developed and others expected to grow by years’ end. Generally, the housing market shows changes that favor the buyer. Supply shows signs of increase while prices are still rising though at a slower rate. Mortgage rates, however, are showing signs of increases. Overall, it may be a good time for first-time buyers to enter the market, if mortgage financing doesn’t get carried away. Here are some other trends that you’ll likely see through the remainder of 2018.
The affordability picture for home buyers is cloudy. While the pace is slowing, home prices are still on the rise. Coupled with higher mortgage rates, your buying power gets reduced on a home purchase. One factor that isn’t clear, or that may change from market to market is the impact of increased supply. With lots of homes on the market, then there could be an increased gap between listing and selling prices. A greater selection of homes for sale across the price spectrum also increases the chances of finding the right home at the right price. In this case, national trends may not hold true across your market.
Home Prices Stabilizing
With increases over six percent in each of the last two years, 2018 should show a moderation in property value increases. New home construction looks ready for a boom through the year. Increasing the supply of houses for sale should reduce the rate at which home prices rise. Locally, it could neutralize or even reverse increases in real estate prices, if competition for sales spurs price wars. Single-family home construction starts may exceed 8% through 2018, or over 900,000 new units.
Resale Home Increases
Home buyers have seen poor selection over the past few years, particularly in the starter home range. Real estate website Realtor.com predicts this is due to change. The fall of 2018 could see a reversal of the trends that minimized the supply side of the resale home market. Though the busy spring and summer market miss this trend, buyers waiting until after the start of the school year could see the best selection.
Overall sales for the year may jump as well. The South should see the biggest gains, with centers such as Dallas, Tulsa and Charlotte leading the way. Strong local economies and plenty of vacant land should aid sales activity.
Increasing Automation for Mortgage Shopping
With Rocket Mortgage by Quicken Loans leading the way, Internet commerce continues to grow in the mortgage sector. More banks are adding online mortgage application software. Convenience is the hallmark of the online economy, so it’s no surprise that the mortgage game jumps on the bandwagon. Watch for financial institutions to expand automation to lead customers to other borrowing products as well.
Poor Credit Options Growing
A growing niche in the mortgage game is the specialty lender ready to take on borrowers with poor credit history. People who have a foreclosure or bankruptcy in the past may find it easier to secure a mortgage once they’re back on their feet. Those with limited income qualification documents may see an easier time, and several lenders now offer interest-only mortgages. Again, a buyer’s market should lead to creative financing options to spur sales volume and lure business.
Increases in Equity for Existing Owners
Though modest, the continuing rise in home prices means that existing homeowners see their equity grow. This, in turn, spurs line of credit financing secured by home equity. The number of home equity lines of credit (HELOCs) should double by 2022, compared with the previous five years. A 16% increase is expected in 2018 alone.