Taking the plunge into the real estate market can be quite intimidating. While predictions for 2018 forecast more moderate gains in home prices and rising inventory levels, low unemployment rates and record levels of consumer confidence mean more buyers are confident about their finances. Depending on where you live and how much you plan on financing, it could mean that 2018 is the right year for you to jump into the market.
After a few years of low-interest rates hovering around the 3% mark, the Fed is now making some noticeable increases. For example, the rate for a 30-year fixed mortgage broke the 4%–mark last year. It is predicted that interest rates could reach up to 5% by the end of the year.
Over the past several years, home prices have soared, but, in 2018, price increases are expected to moderate. It is forecasted that home prices will increase 3.2% year over year and existing home sale prices are expected to increase 2.5% year over year.
However, where you live plays a big part in this. Markets like San Francisco are predicted to finally lose some steam; meanwhile, sales numbers and home prices are poised to climb in southern states like Texas and Florida, where economic momentum continues chugging along and new construction is happening at the right price points. So basically, home prices will increase, but not at the same pace they have over the last several years.
Increase in Inventory
Since 2015, inventory has been relatively low which made it a little harder to find the perfect home within your budget. However, by fall of 2018, the tides will change starting with Boston, Detroit, and Nashville recovering first. The majority of inventory growth will happen in the middle to upper price points. New home construction is also expected to expand, but that will happen more slowly.