There is both good and bad news in store for the new year in real estate. Buyers and sellers will both benefit but have an increased number of obstacles from what is being forecast within the housing market.
There will be more homes for sale and available to meet the past demands of buyers. While this may be a perk for buyers after a record low of homes for sale over the past 18 months, sellers must be more competitive and keen to the marketplace than before. The past year or 2 may have been slanted towards a seller’s market, that scale is tipping to the buyer. Buyers will have more homes to compare and contrast, to meet their needs, and to meet their demands. A note of interest may be that there will be a significant increase in property for sale in high-end markets in larger metro areas and their surrounding suburbs and neighboring towns.
More homes may open for purchase, but less money will be on the table to make the transactions. Affording a home, buying, financing, and maintaining these properties. The mortgage rates are expected to increase as well as the actual selling price of homes. These increases are likely to increase at a higher rate than the increase in income and net payments. Budgets will be tighter and those affected most will continue to be first time home buyers.
Millennials, will once again, reign the buying market. For many the homes purchased will be their 2nd, not seeing the struggle associated with those first-time home buyers and owners. Though this population subgroup will reign in buying, they are much more price conscious than others and more willing to be flexible in their “needs” and wants in their residences. Because of the increased amount of student debt and desire to maintain a particular “lifestyle” millennials will make more compromises, such as smaller living spaces, different neighborhood or location, and fewer perks to stay within their comfort zone of daily living.
One factor that may change and alter the outlooks for home buyers and sellers is the new tax law. The expected outcome of those changes in tax law is unknown, forecasters are uncertain of how this key component of home buying, financing, and selling will affect the market for the year and into the future.