This time of the year, we begin thinking about how the market will change, nationally and in our area. Real Estate is constantly in flux, and sometimes it's hard to keep up with it. Realtor.com suggests several "game changing" trends expected for 2018. Here are a couple that we think may be true for the metro-Detroit market:
1. Supply catching up with demand
Check out what they say here:
"After three years of a crushing shortage of homes for sale, the realtor.com economics team is predicting that the shortfall will finally ease up in the second half of 2018.
'The majority of the year should be challenging for most buyers, but we do expect growth in inventory starting in the fall,” says Danielle Hale, chief economist for realtor.com.'
Although for-sale housing inventory is expected to stay tight in the first quarter of the year, reaching a 4% year-over-year decline in March, if it increases as predicted by fall, that will be the first net inventory gain since 2015. Markets such as Boston, Detroit, and Nashville—all of which recently made it onto our monthly list of the nation's hottest real estate markets—may see inventory recover first."
Did you catch a couple of important pieces there? First, Detroit is one of the hottest markets. Second, because of that, we will likely see an inventory increase in the second half of the year. What does that mean for you? If you are thinking about selling, the first half of the year may be better because there will still be higher demand.
2. A Whole New Generation of Home Buyers
Don't discount millennials!
"as the largest generation in U.S. history reaches that sweet spot in their 20s to 30s when they're settling down and starting families, they're particularly motivated to buy. Millennials could make up 43% of home buyers taking out a mortgage by the end of 2018, up from an estimated 40% in 2017, based on mortgage originations. That 3% uptick could translate into hundreds of thousands of additional new homes. As inventory starts to rebound in late 2018 and in years to come, first-time home buyers will likely make up an even larger share of the market. They probably shouldn't wait too long to buy, either—mortgage rates are expected to reach 5% by the end of 2018 due to stronger economic growth, inflationary pressure, and monetary policy normalization."
Two take aways there - more buyers, and higher interest rates. More buyers means more demand. Higher interest rates can mean a lot of things when you break it down.
What does this mean for you? If you are thinking about buying or selling - give us a call. Every person/situation is unique. It's our job to help you navigate through the variables, and we would love to serve you!
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