This is the time of year when everyone –from lenders to real estate organizations to builders – is making predictions about the housing market for 2018. Here are five interesting predictions we wanted to share with you.
1-Low Inventory Will Continue to Drive the Housing Market in 2018
The shortage of homes will continue to be the primary driver of the real estate market next year. That’s according to Zillow, which reports that there are currently 12% fewer homes to choose from in the U.S. than there were a year ago. It also reports that about one-third of the homes that are available are priced out of reach for first-time millennial buyers.
2-Single-Family Home Sizes to Decrease
According to a report by the National Association of Home Builders, the size of new single-family homes has been slowing decreasing since 2014, and will continue to do so. Builders are forecast to build more new houses that are smaller and more affordable in response to consumer demand.
3-Rate Refinancing to Cool Down
Freddie Mac predicts that the shift from a refinance-oriented to a purchase-oriented market, which has already begun, will continue through 2018. The government-backed mortgage giant forecasts that the refinance share of mortgage activity will decline to 25 % in 2018, the lowest annual refinance share since 1990.
4-Mortgage Rates to Rise
The Mortgage Bankers Association predicts that mortgage rates for both FHA and conventional loans will go up next year. The organization expects 30-year mortgage rates to climb steadily next year, reaching above 5% by the end of 2018.
5-Prices to Continue to Rise
A number of forecasts predict that home prices will continue to rise over the next 12 months, by somewhere between 3% and 5%.
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