Buying a home is both an exciting and scary process, especially for new homeowners. Whether you’re a veteran home buyer or jumping into the process for the first time, knowing the market is important. Every year the market adjusts based on the number of homes on the market compared to the projected number of buyers, as well as interest rates. When it comes to buying a home in 2018, the market is projected to be a buyers market, but not for long.
Before heading out to open houses and scheduling walkthroughs, make sure you know everything you need to about buying a home in 2018.
Buying a Home in 2018 | Forecasts
There are a number of professionals who make a living forecasting how the market will swing year to year. Using history as a guideline as well as current conditions, forecasts can be made. One of those professionals, Javier Vivas, director of economic research for Realtor.com has a few words to keep in mind for buyers. “We’ve seen two or three years of what could be considered unsustainable levels of price appreciation, as well as an inventory shortage that resulted in a record-low number of homes for sale across the country,” Vivas continues to say, “When you factor those together, you have a market that has to either explode or see some relief.” While that doesn’t seem encouraging, experts, including Vivas believe that the outcome will be relief over explosions.
Buying a Home in 2018 | Interest Rates
Interest rates have been low for a few years. In fact, we’ve hit record-lows of 3% and those interest rates have been music to the ears of buyers across the country. However, interest rates are expected to go up. Last year, the interest rate for a 30-year fixed mortgage broke 4% and that is a sign that interest rates will continue to rise. By the end of 2018, interest rates are expected to hit 5% or higher. This means that waiting may not be the best idea for buyers looking for a low-interest rate.
Buying a Home in 2018 | Costs of Buying
Prices have been rising year-over-year for the past few years. The fast rise in pricing has caused some people to recall the days before the bubble burst but that may not be the case here. Instead, what we have is an increase of in the economy that has made buyers feel more comfortable making bigger purchases. In 2018, prices are predicted to plateau with a 2.5% year-over-year increase opposed to the 5.5% year-over-year increase that 2017 ended with. One of the important factors in pricing will always be, location. Some markets like San Francisco will lose steam, but not by much and southern states are likely to see more of a climb.
Buying a Home in 2018 | Inventory
One of the biggest issues we’ve had in the US is housing inventory. Professional builders all want a piece of the pie that has been feeding the economy since 2015. Most homes being built are for the higher tier brackets. People willing to buy homes at $750,000 and up have been getting the homes they needed but that leaves the rest of us behind. Luckily, by fall 2018 that is expected to change. Midrange homes are expected to become more widely available with price points of $350,000 and up in markets like Boston, Detroit, and Nashville. Other markets will begin to follow suit later.
Overall, now is the time to buy if you’re ready. While inventory grows, prices plateau, interest rates will rise. It’s important to consider your personal financial situation first but if you’re comfortable buying a home, the earlier the better in 2018.