2018 Real Estate Forecasts and Trends
Can you believe that we’re already winding down 2017 and getting ready for 2018? Before the hustle of the holiday season takes over, let’s take a moment to ponder what the real estate market in 2018 will look like. What are forecasters saying? Let’s find out.
Housing Market Still At Record Highs
In 2016, the housing market hit a 10-year high. 2017 marked record-setting phenomenal growth. In fact, home sales will rise by 3.5 percent by the end of 2017, and by another 2.8 percent during 2018, according to the National Association of Realtors. Despite the fact that an overall downward trend began in 2017, home prices remain relatively high. This is being driven by increased household income and equity. This is great, because it means lots of buyers, but it also means more competition for you as an agent.
2018 will see an overall shortage in housing inventory, and that shortage will drive the market. The shortage will keep home prices high. Unfortunately, it will also mean that first-time homebuyers will have a difficult time coming up with money for a down payment. Over half of properties for sale are higher priced homes–prices which are out of reach for many buyers. Estimates are that 12 percent fewer homes will be on the market in 2018.
Because of the shortage, more first-time home builders are moving from urban settings to the suburbs where housing is more affordable. Builders are also building more reasonably priced entry-level or starter homes to meet the needs.
Home prices will continue to increase—most forecasters agree on this point. Mortgage rates will also rise; in fact, the Federal Reserve says to expect one more rate hike in December 2017. This means that homes will become less affordable for those buyers who are on the bubble in terms of what they can afford.
Foreclosure “boomerang” buyers
At the end of the last recession in 2009, around 1.5 million homebuyers had gone through foreclosure. In order to borrow money for another home purchase, a homebuyer must wait seven years after foreclosure. For most buyers, that waiting period is now over, and the last wave of these “boomerang” buyers will be looking for homes in 2018.
These are distressed buyers who are looking for low down payments on loans like those offered through FHA. Since it has been a decade since they last purchased a home, use your blog and social media to let them know about real estate, mortgage and lending changes that have occurred since their last purchase. Lending standards were much more lax back then; let them know that practices have changed and what they should expect. Show them how to find FHA-approved properties and communities and teach them about the FHA loan process. They’ll be grateful that you did, and you’ll establish yourself as as a trustworthy expert in the real estate market.
Generation X Buyers
Many of these boomerang home-buyers are from Gen X, born as early as 1965, and some now in their fifties. With every retailer and company scrambling to market to millennials and baby boomers, Gen X is the oft-forgotten generation. Gen X was hit hardest by the economic recession; the Federal Reserve reports that the average age for foreclosure was 45. These homebuyers are back in force now that the economy is recovered. They’re ready to buy homes, but are four times more likely to choose FHA financing than other buyers.
Let them know that your real estate business knows who Gen X is. They’re a big target market for 2018. Gen X is the only generation to buy more homes in 2017 than they did in 2016, and that trend is expected to stay the course in 2018. Gearing your content toward Gen X is a smart decision; you’ll be reaching buyers that many other agents will overlook.
The Newcomers Generation Z
Generation Z (those born after 1995) are now the new kids on the block. 2018 is the year that this generation will begin to enter the real estate market—and fast! The oldest Gen Z cohort is graduating from college and this large group will begin to quickly gain influence in the market.
Be the realtor that focuses on the post-college housing market in 2018. Gen Z prefers to live in urban settings, but they’re also generally deep in debt from student loans, so they may have to compromise by casting a wider net when it comes to housing. And you’ll be there to help them. Remember that social media is very important to them, so those platforms represent the best way to reach out to Gen Z with your content. Gen Z will be 2.5 billion people strong globally by 2020, so harness that consumer power for your real estate business starting next year.
Millennials and Boomers
While Gen Z will want to stick to urban dwellings, millennials (age 25-34) are migrating in droves to the suburbs in search of more affordable homes. Sure, they’d rather be in urban cities, but they can’t afford it yet, so they’ll settle for the burbs as close to the bustle as they can get.
Look for baby boomers (age 55 and older) to drive the housing market in 2018. They have more wealth than other generations, so they’re much more likely to purchase a home. The sheer number of boomers is staggering; the nearly 80 million Americans in this age bracket are sometimes referred to as the “silver tsunami.” Metrostudy predicts that from 2018-2023, boomers will buy more than half of new homes.
This generation has a massive demand for housing with specific needs: single family homes that are one-story or that easily accommodate wheelchairs, but also adult community living as well. As a realtor, you’d be smart to target this audience and learn their needs for the New Year.
Both millennials and boomers are big drivers for new home design. Builders are certainly paying attention, offering features like wider hallways and floor plan designs that make it easy to add on to the home as the family grows and changes.
Ready for 2018?
These groups of diverse buyers add up to create a vastly competitive 2018 market. Agents will have to use new and innovative ways to reach buyers in a specific generation. Social media, custom content and streaming video will all become much more important to establish your expertise to meet their needs.
All aboard 2018! Be the right agent with the right information, tools and knowledge to set yourself apart in the new year.