The U.S. housing market expects continued improvement throughout 2018. Home prices will continue to climb, albeit at a slower rate, and projections show more houses to go on sale toward year’s end, which gives potential buyers a wider selection from which to choose. However, 2018 may pose some unique challenges for homeowners as mortgage rates rise. Below are several important mortgage and Housing Trends to anticipate this year.
Home Prices Slow Their Climb
The list starts with a bit of good news for first-time buyers. Appreciation is set to slow down after a fast-paced rise over the past couple of years. In 2016, home prices rose by 6.3%, according to information from the Federal Housing Finance Agency but, for 2018, the forecast is for only a 4.1% increase in the price of existing homes across the country. New home construction partly attributes to the slowdown. Economists predict that single-family home construction will rise sharply this year, based on applications for building permits.
Home Sales Are Increasing
Sales of current homes are expected to increase slightly in 2018. It’s estimated that existing home sales will go up by 2.5%, and new-home sales are predicted to rise by approximately 7%. Southern cities will exhibit the most significant growth. Markets in Texas, Oklahoma, Arkansas, and North Carolina aren’t under as many regulations, they have solid regional economies, and there’s enough vacant land on which to build.
Mortgage Rates Are On the Rise
Projections show that mortgages will rise in 2018. According to data provider CoreLogic, a 30-year, fixed-rate loan will have an average rate of 4.7% by the end of the year. That is a .63% increase over the same period in 2017. Not only are rates increasing, but they’ll be at their highest since 2011. However, as many in the industry already know, mortgage interest rates are very hard to predict reliably, and the increase may not be as significant as some industry experts believe.
Housing Becomes More Expensive
If, as predicted, mortgage rates and housing prices increase in 2018, homes will become less affordable. For instance, if mortgage rates rise by 4.7%, and the median price of current homes increases by a similar number, monthly payments on the average house will rise considerably. However, most of the country’s middle-class families still have a bit of wiggle room.
Borrowers With Poor Credit Will Have More Options
Some specialty lenders are continuing to focus on non-traditional Mortgage Loans. Several mortgage lenders are offering interest-only and limited-documentation loans. These are considered non-QM loans because they don’t meet Freddie Mac and Fannie Mae rules for qualified mortgages.
Borrowers, Buyers, and Sellers Will Feel the Effects of Tax Reform
At the time of this writing, Capitol Hill’s lawmakers were still ironing out the details of 2018’s tax reforms. Both the Senate and the House versions of the bill limited the number of sellers who could benefit from capital gains exclusions, and home loan interest tax deductions were handled differently in each version. Keep coming back for additional information on how tax reform will affect homeowners and buyers.
These are some of the most important housing and mortgage trends to watch for in 2018. Consult a Loan Officer in Madison Wisconsin to learn how these developments will affect a borrower or homeowner’s specific situation.
Barb Miller NMLS#929071 – PrimeLending | 608-206-2988 | firstname.lastname@example.org | Apply For a Loan