2018 Real Estate Market Predictions
The real estate market overall is expected to grow in 2018, according to most experts in the field. This is great news for investors, but first-time homebuyers may be looking at a slightly more difficult year. Here are some predictions for the real estate market in the coming year.
Inventory Shortages Continue to Drive the Market
Inventory shortages continue to be the main factor in home prices again in 2018. Housing starts are still low, and Svenja Gudell, Zillow chief economist, says that nationwide there are 12% fewer homes to choose from now than a year ago. Most of these properties for sale are in the highest home value bracket and well out of the price range of most first-time home buyers. This means those looking to buy a home for the first time will continue to struggle to find affordable housing for most of the year.
Demand Remains Flat
One factor keeping home builders from committing to a lot of new home starts is the mostly flat demand. One of the biggest factors in home demand is population growth. In the United States, population growth has remained low over the last few years with a growth of only 0.7% last year – the lowest since 1937. So long as demand remains on the low side, builders will likely not surge to build a large number of new homes.
However, Metro Nashville is an area still experiencing high growth from new people moving into town. As a result, our local area will continue to have new home developments, though these may also slow some from past years.
Builders Focus on Entry-Level Homes
While for several years now home builders have focused on the higher value homes, the tide may finally turn this year. The demand in the market for homes is largely in the entry-level segment at this time, and builders may move to capitalize on the market. So far, the number of new homes built for the past several years has remained well below historical norms, but the entry-level demand may finally shift this trend in favor of first-time homebuyers. Unfortunately, the low-cost trend may mean a greater shift toward more affordable suburban areas. Land and construction costs are prohibitive in cities for entry-level homes. Expect to see a move toward the suburbs in the coming year.
Remodeling Fever Continues to Burn
One factor in keeping inventory for homes low has been the recent surge in remodeling current homes by homeowners rather than buying a new home. Expect to see this continue in 2018, especially with the popularity of home remodeling shows on television giving homeowners more ideas for remaking their own homes rather than selling them to look for others. Overall, this keeps home inventories down and continues the drive toward higher home values across the market.
The real estate market for 2018 continues to promise to be a great market for sellers, but those just starting to look for their first home will likely continue to struggle.