As we continue to move through 2017, it’s about that time to look at 2018 real estate market trends. This year has been a hot seller’s market, and that trend will continue in 2018. With an influx in Michigan home buyers, homes aren’t staying on the market for long. If you’re considering buying or selling, it’s important to keep up on projected trends. Here are some real estate market trends to expect in 2018.
1. Seller’s market: Demand will remain high & inventory will remain low
Inventory has been at a 15 year low in 2017 and that real estate market trend will continue into 2018. There has been a massive influx of people looking for new homes, but the inventory just hasn’t been there. This puts the state of the market in a seller’s market, giving seller’s an advantage to get top dollar for their homes by creating bidding wars and fewer contingencies. This year has been a great year to put your home up for sale as you’re almost guaranteed to get a high ROI and in 2018 this will remain one of the top real estate market trends.
2. Home sales are expected to slightly rise.
According to National Association of Realtors®, in 2017 we saw home sales rise by about 3.5%. This is one of the real estate market trends that will continue in 2018 with a projected home sale rise of about 2.8% reaching 5.8 million is home sales overall. This means that home affordability will in turn go down as fewer people will be able to afford homes as were able to in 2017, when home affordability was at it’s peak. However, it won’t have as great of an impact on home affordability as in years prior.
3. Home prices will continue to steadily rise and surpass pre-recession levels
Another one of the real estate market trends for 2018, that we’ve seen gradually happen over time, is an increase in home prices as we recover from the recession. In 2017, home prices were finally around pre-recession mark and that upward trend will continue in 2018. Home prices are actually projected to be higher than the pre-recession levels for the first time since the recession. This means that the 2018 real estate market is in a more stabilized place than it has been in a decade. In Michigan, for example, we saw a 7.4% increase in home prices from 2016 to 2017 and that trend is expected to continue with home prices rising about another 3.5% in 2018. Right now the median home price in Michigan is around $135,000 so that amount will slightly rise.
4. Mortgage rates will slightly rise
One of the real estate market trends to look out for are rising mortgage rates which will also contribute to a decrease in home affordability. This rise will not be drastic and will remain below 5%, however, rising mortgage rates will cause fewer buyers to be able to afford as much home. This will result in home budgets being slightly lower for home buyers in 2018. This national prediction is true for Michigan as well, as mortgage rates are expected to slightly rise to around 4.2%-4.6% in 2018.
5. Generational shift in buyers and sellers continues:
We’ve seen a generational shift in home buyers and sellers in recent years. For a long time millennials were becoming homeowners later than previous generations. However, that trend has now shifted and the number of millennial home buyers is increasing at a steady rate. Here’s a breakdown of 2018 real estate market trends we’ll see for each generation.
Millennials are buying homes in larger numbers than ever before
Millennial homeowners have risen over the last few years, and 2017 wasn’t any different. However in 2018, the number of millennial homebuyers will be larger than ever before. As millennials become more stable in their careers, renting homes no longer makes sense, increasing the number of millennial home buyers.
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Gen Xers are becoming move-up buyers and splurging on second homes
Another generational real estate market trend we’ll see in 2018 is more Gen Xers taking advantage of the seller’s market and putting their home’s up for sale with the goal of upgrading to a larger home. This will be for a number of different reasons including growing family sizes, or simply a more luxurious space. Not only will this include new larger homes, this will also include second homes, especially in Michigan where second properties are common.
Are you a move up buyer with more questions than answers? Download 13 Questions for Homeowners Before Making a Move >
Baby boomers aren’t moving as often
Finally, another one of the generational real estate market trends is the rate baby boomers are buying homes will drastically slow down. This is because baby boomers are at a point in their lives where they’re in a home where they’re comfortable staying put. This means that the real estate market is shifting away from baby boomers being home buyers and moving toward younger generations.
Overall, 2018 will continue to to be a hot real estate market overall and specifically in Michigan. We’ll see a large number of buyers flood the the market, making it an ideal time to sell your home. What other real estate market trends are you projecting in 2018? Let us know in the comments.
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