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Reasons To Buy A Home In 2018 But You’d Better Hurry

 1. Rates are going up

After years of record-low interest rates (hello, 4%!), the Fed is finally making some noticeable increases: The rate for a 30-year fixed mortgage broke the 4% mark last year. And with economic growth continuing to carry momentum, Vivas predicts we’ll see at least two to four more rate increases throughout 2018. Rates are anticipated to hit 5% by the end of the year. “The big story there is that those increases will further constrict affordability,” Vivas says. “The more buyers wait, the more expensive it will get to buy—not just because of home prices, but because of inflationary pressure.”

 2. Prices are climbing, but not crazily fast

Home prices have soared over the past few years, pricing otherwise well-positioned buyers out of high-cost areas and leading some experts to cry “bubble”. But in 2018, price increases are expected to moderate. Vivas forecasts a home price increase of 3.2% year over year, after finishing 2017 with a 5.5% year-over-year increase. Existing-home sale prices are predicted to increase 2.5% year over year. Of course, it all depends on where you live. While red-hot markets such as San Francisco are predicted to finally lose some steam, sales numbers and home prices are poised to climb in Southern states such as Texas and Florida, where economic momentum continues chugging along and new construction is happening in the right areas. So what does that mean? Basically, home prices will still increase, but not at the same pace as they have over the past few years.

3. Inventory Levels are Still Low – An Avg.  2.5 Month Supply – A Healthy Market should have a 6 Month  Supply

An inventory shortage has plagued the U.S. housing market since 2015, forcing some buyers to settle (a tiny house with linoleum floors for $1 million, anyone?) and keeping others out of the buying game entirely. By fall 2018, the tides will begin to turn, with markets such as Boston; Detroit; and Nashville, TN, recovering first.  The majority of inventory growth will happen in the middle- to upper-tier price point, in the ranges of $350,000 and $750,000 and above $750,000, Vivas predicts. But desirable locales in New York, Long Island, Queens, Brooklyn and Westchester have a lot further to go to get back to a six month supply of homes. So no matter how many people you see at that Open House, make an offer!  Unless you want to stay in that rental or your parents basement for another three years.  New home construction is also expected to expand. But that will happen slowly, thanks to a constricted labor market, limitations on the amount of lots and land that’s available, tight bank financing for building loans, and a run-up in building material prices, says National Association of Home Builders chief economist Robert Dietz. “It’s been a slow climb back from the recession, and now we’re confronting all of these limiting factors and supply-side constraints,”    It’s particularly tough, he says, for builders to break ground at the entry level for first-time buyers, particularity in high-cost coastal markets such as California. That means it will take longer for those inventory levels to recover.

 

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