Photo: Robert Clark
Falling inventory was the big story in the US housing market in 2017, and it looks to be a principal player this year as well.
Yet despite the myriad of challenges facing the market in 2018, Adam Contos, Co-CEO of the real estate company Re/Max, predicts this year will be a booming one for the housing market.
The US housing market in 2017 had no real quirks and many of the major market indicators remained steady throughout the year, says Contos. Inventory remained tight, median home prices went up and sales increased consistently.
The seller’s market was tough for homebuyers, “especially ambitious first-time home buyers looking to lay down roots.” Housing starts were down in 2017 because “builders have focused on more profitable, higher priced homes and multi-family residential construction.”
But as 2017 came to a close, single-family home building and housing starts were on the rise, possibly a good sign for 2018.
“Turn up the volume on new home building. Until that happens, we’ll struggle with low inventory and some markets will feature all-out bidding wars,” Contos writes in the report.
Contos tells BuzzBuzzNews that home prices will undoubtedly rise in 2018 and 2019 as inventory is not keeping up with demand. This might leave some buyers, particularly first-time buyers, out in the cold.
“There will always be opportunities for first-time home buyers, but many will have to be willing to make some compromises in terms of location, square footage and more,” Contos tells BuzzBuzzNews.
As consumer confidence grows, existing home sales could increase in 2018, and possibly even surpass record levels set in 2006. But Contos is quick to add that another devastating hurricane season and possibly even negative impacts of the new massive GOP tax overhaul could derail existing home sales in the coming months.
“New restrictions on mortgage interest deduction and property tax deduction could deter some from buying homes in the country’s priciest markets, and could also deter some homeowners with existing large mortgages from selling,” Contos writes.
And in the end, this could have a negative impact on already tight inventory levels, especially in some of the country’s hottest markets.
Another major trend Re/Max sees playing out for 2018 is the further evolution and application of tech in the industry to make buying and selling homes both seamless and as painless as possible for consumers and agents alike.
“Consumers may not use bitcoins to buy a home tomorrow, but we’re open to the possibility,” Contos says.
Overall, Contos remains very optimistic about the state of the housing market in 2018, particularly in light of the recent strengthening of the economy fueled by wage growth and increasing consumer confidence.
“With the challenges will come ecstatic home buyers and sellers, new and booming communities — one boasting the new Amazon headquarters — and fresh innovations in real estate that we never saw coming.”
Click here to read all of Contos’ predictions for the 2018 housing market.