Housing Market Predictions for 2018

Last year was certainly a big year for the U.S. real estate market, but predictions suggest that 2018 could be just as healthy and robust. What exactly can homeowners, buyers, sellers, and investors expect in the coming months?

Housing Market: Looking Ahead

Trying to explain exactly what will happen in an industry that’s influenced by thousands of internal and external factors is nearly impossible, but it’s January – and that’s what industry experts do at this time.

Having said that, here’s a look at some housing market predictions for 2018.

1. Home Value Appreciation

The Case-Shiller U.S. National Home Price Index increased a remarkable 5.92 percent from January through October 2017 – the biggest gain since 2013. While experts don’t predict anywhere close to that much appreciation in 2018, at least one expert expects national prices to rise 3.2 percent this year. That’s still a pretty healthy number and indicates that the market isn’t done growing.

2. Increased Emphasis on Education

One of the reasons the U.S. housing market crashed so suddenly in 2008 was there were a bunch of uneducated homebuyers and homeowners who collectively made a multitude of poor decisions. As the market has come back around in the past few years, lenders and consumers alike have placed a bigger emphasis on education.

Research reveals that both pre-purchase and post-purchase education is effective – as was shown in one program held in Tennessee. As HUD explains, “The participants who received homebuyer education were much less likely (10.7%) to have experienced foreclosure by 2009 than the comparison group (17.6%), and the amount of money the households saved by avoiding foreclosure far exceeded the cost of the education.”

In 2018, look for more lenders to invest in educational content for customers – such as these from OnQFinancial. While no solution is perfect, education helps keep people on the right track.

3. Last Call for Refinancing

For those who locked in mortgage rates years ago, 2018 may be the last chance to receive affordable refinancing.

“The Federal Reserve is expected to pursue a more restrictive monetary policy,” says Robert Johnson, CEO of The American College of Financial Services. “And, according to the CME’s FedWatch Tool, by June 2018 there is a 79 percent probability that the target Fed Funds rate will be at least 50 basis points (0.50 percent) higher than today. By November, there’s an 89 percent chance that rates will be at least 50 basis points higher than now.”

4. Pace of Home Sales Will Temporarily Slow

A few of the provisions included in the recent tax bill will have a direct impact on the housing market. The most notable of these changes is related to mortgage interest and property tax deductions.

“Experts anticipate households will take some time to do the math on how the tax plan impacts them and the value of their home before making any big moves,” Samantha Sharf writes for Forbes. “Nevertheless underlying demand should remain strong after the best year for wage growth since the recession. Pent up demand from renters who have been unable to find suitable homes to buy also means the lid won’t stay on for long.”

Only Time Will Tell

As history shows, predictions are nothing more than educated guesses. While anything can happen this year, it looks like things will continue to steadily improve over the next 12 months.

While this is good news for the economy, as a whole, it’s even better news for individual buyers, sellers, and property owners.

Melissa Thompson
Melissa Thompson writes about a wide range of topics, revealing interesting things we didn't know before. She is a freelance USA Today producer, and a Technorati contributor.