What You Should Know About the 2018 Housing MarketMarch 26, 2018
New residents in the neighborhood need new things—furniture to fill their home, groceries for their refrigerators and assorted tools and hardware to help them settle into their new space.
Should retailers be prepared to roll out the welcome wagon for new neighbors? All signs point to yes, according to U.S. housing market forecasts for 2018.
We will take a look at how the housing market is expected to grow, who is buying houses, provide an overview of Millennial home buyers and outline the hottest housing markets in 2018.
The 2018 U.S. housing market is looking good. Both real estate database company Zillow and the National Association of Home Builders (NAHB) forecast growth in the housing market.
Today, most homes, which is 52.6% of all homes nationwide, are worth as much or more than they were in 2007. The median home value is $207,600. Home values in the U.S. have increased 6.7% and Zillow is predicting that that they will rise 3.1% within the next year.
The NAHB expects total housing starts to grow 2.7% to 1.25 million units in 2018 with the most growth in single-family housing compared to multifamily units.
New home sales were 14.1% higher in December of 2017 compared to December 2016. Existing home sales also increased 1.1% from 2016 to 2017.
We know that houses will be up for sale, but will Americans buy houses in 2018? Yes—16% of Americans plan to purchase a home within the next year. That is about 51.7 million people, most of whom are not scared off by increasing mortgage rates.
Who are these home buyers and what are they buying? The National Association of Realtors recently released its Home Buyer and Seller Generational Trends 2018 report. Here are a few key stats about home buyers from this comprehensive report:
• 34% of all home buyers are 1st-time buyers
• 65% of recent buyers are married couples
• 37% of all buyers have children under 18 living at home
• The most common reason people under 62 bought a new home was because they wanted a home of their own.
• New home buyers made up 15% of all buyers and previously-owned home made up 85%
• 83% of all homes sold were single family homes
• The average home purchased has 1,870 square foot, 3 bedrooms & 2 bathrooms
What effect does the rising interest rates have on the housing market? Not much, according to Redfin’s recently released home purchasing study.
Mortgage rates were below 4% at the end of 2017, Redin reported. As of March 15, 2018, mortgage rates were 5.54% and have steadily been rising since January. But just 6% of home buyers said they would cancel their plans if mortgage rates rose above 5% and 77% said they expected home prices to rise in their area in the next year.
“Tight credit, lack of inventory and high demand are the major factors that tell us there’s no housing bubble, despite rapid price increases,” said Redfin chief economist Nela Richardson on Redfin’s website announcing the study findings. “There are still many more buyers than the current housing supply can support, with no major relief in sight. Strict lending regulations make it much harder to buy a house you can’t afford than during the housing boom a decade ago. Finally, still-low interest rates somewhat offset high prices for some buyers.”
Millennials make up the biggest group of first-time home buyers. The pace of young adults who purchased homes has been increasing since 2012. Adults ages 28-31 (in the Millennial group) homeownership rates are two to four times greater than older adult groups.
1. Colorado Springs 14.7%
2. San Antonio 14.4%
3. Denver 12.8%
4. Orlando 12.7%
5. Honolulu 12.2%
6. Austin 11.8%
7. Cape Coral, FL 11.7%
8. Houston 11.7%
9. Sarasota 11.1%
10. Seattle 10.8%
Where are the hot housing markets? Zillow based its top 10 list on several factors, including home value and rent forecast, income, population growth and number of open jobs.
Zillow’s top 10 hottest markets for 2018:
1. San Jose, CA
2. Raleigh, NC
3. Seattle, WA
4. Charlotte, NC
5. San Francisco, CA
6. Austin, TX
7. Denver, CO
8. Nashville, TN
9. Portland, OR
10. Dallas, TX
5 best markets for first-time buyers:
1. Tampa, FL
Inventory: 13,733 homes
2. Indianapolis, IN
Inventory: 6,476 homes
3. Houston, TX
Inventory: 26,275 homes
4. Orlando, FL
Inventory: 9,351 homes
5. San Antonio, TX
Inventory: 8,036 homes