Housing Forecast for 2018
The housing picture is improving in 2018. Home prices will still climb but not as fast, more homes are expected to be for sale at the end of the year giving prospective buyers a greater selection, while homeowners will have more equity to borrow from. Here are some trends to anticipate according the Florida Realtors Association:
1. Home Prices Decelerate
Home price appreciation is cooling down in 2018 after an intense few years. Prices jumped 6.3% in 2016 and are shaping up to be right around 6% this year. But median forecasts among six industry lender groups estimate a 4.1% increase in existing home prices nationwide next year. A contributing factor to this is the large number of new home construction we are seeing. Newly constructed single-family homes will rise sharply in 2018 based on the amount of new building permit applications submitted.
2. More Homes on the Market
The past few years have had a shortage in supply of homes for sale. This is because of a few things; baby boomers have shown they are content with aging in their homes; investors bought up a bunch of houses during the housing bubble burst and are making money as landlords; and home builders have not been building for entry-level buyers. The good news is this is all changing and the supply pinch is ending. Danielle Hale, chief economist for Realtor.com, says we should see growth in inventory by fall of 2018.
3. Home Sales Rising
The resale of existing homes are estimated to rise by 2.5% to 5.6 million units in 2018. The sale of new homes will also increase to a generous 7%. According to Hale, major cities in the south, like those in Palm Beach County, will see the most sale growth next year.
4. More Equity and HELOCs
As home values rise homeowners gain equity, and banks expect millions of homeowners to borrow against that equity. About 1.6 million homeowners are predicted to get new home equity lines of credit in 2018, which is a 16% increase over 2017, according to a new TransUnion study. The credit bureau says 67% of homeowners have enough equity to get HELOCs, and forecasts that 10 million homeowners will get HELOCs in the next 5 years, double the number of new lines of credit than the previous 5 years.