Real estate is the epitome of passive income investments, and whether you choose to invest in traditional rentals (i.e., single family homes/multi family homes) or Airbnb rentals, you must study the local housing market and find the best investment properties aligned with your long-term business vision. There is no need to talk about the benefits of real estate investing because the list is endless. Here, we will give you the top residential real estate trends for 2018 to help you kick start your investing on a high note.
Top Residential Real Estate Trends of 2018
#1 of Residential Real Estate Trends of 2018: Home Prices Are on the Rise
Home prices are expected to increase early this year because of the big disparity between high demand and low supply in the US real estate market. In a nutshell, inventory shortages will drive the housing market and increase home prices. This will serve as a barrier for first time home buyers who will find it hard to afford buying a house and saving for a down payment.
Why are prices increasing, you may be wondering? Well, to put it in simple terms, we need to know basic economics:
- If the demand goes up, and the supply remains the same, there will be a shortage. This will mean the price will increase.
- If the demand goes down, and the supply remains the same, there will be a surplus. This will mean the price will go down.
To relate it to the US real estate market in 2018, demand will trump supply, and home owners will have significant leverage over home buyers. Home buyers will find it difficult to find houses for sale during the beginning of 2018.
#2 of Residential Real Estate Trends of 2018: Real Estate Is in Favor of a Seller’s Market
In correlation to the first trend, homeowners will gain much leverage over home buyers and will be able to enjoy lofty prices in the US real estate market this year. But with this said, homeowners are not keen on selling right now, which is causing the shortage of inventory in the first place. One major reason is simply because they are making too much money as landlords to sell. Early in 2018, home buyers, especially first time buyers, will find it extra challenging to find houses for sale. On a better note, more houses could be for sale toward the end of the year, giving home buyers a greater selection to choose from.
#3 of Residential Real Estate Trend of 2018: Millennials Are at the Forefront
We see more millennials taking out mortgages to invest in the US real estate market this year. They are more confident to apply for bank loans and get approved for two reasons: growing income and a strong economy with positive indicators. With this said, millennials and/or first time buyers might find it hard to buy houses and compete with the big dogs for the best investment properties in early 2018.
#4 of Residential Real Estate Trends of 2018: Home Sales Grow in Southern Cities
The highest sales growth early this year will be in the South hands down. According to Market Watch, there will be a 6% growth in home sales, particularly in Dallas, Texas; Tulsa, Oklahoma; Little Rock, Arkansas; and Charlotte, North Carolina.
#5 of Residential Real Estate Trends of 2019: Mortgage Rates Are Moderately Rising
Mortgage rates are likely to rise, reducing affordability, another challenge for home buyers looking for a way in the real estate market. On the other side, homeowners will have more leverage and equity to borrow from the banks. As home values go up, homeowners gain equity. And in turn, banks are expecting many homeowners to take advantage of the current conditions and borrow against their equity.
#6 of Residential Real Estate Trends of 2018: Is a New Tax Plan in Order?
A possible tax reform could impact the housing market, both homeowners and home buyers. There will be some provisions in terms of a loss of tax advantages for homeowners and house investors, which might result in fewer sales and impact prices negatively.
#7 of Residential Real Estate Trends of 2018: Housing Construction Starts Will Slowly Rise
To offset the low supply and high demand, more houses will be built, but not enough to fill demand. According to Market Watch, the construction of single family homes will take the lead and increase significantly in 2018. Single family housing starts will increase by 8% in 2018, to an estimated 912,500 new houses.
#8 of Residential Real Estate Trends of 2018: Economic Indicators Are Positive
The economy is strong, and numbers are looking sunny side up this year. With positive economic indicators and steady employment growth, we can expect a fairly optimistic real estate market in 2018. A positive economy has positive repercussions on the US housing market.
All in all, the US housing market for 2018 is looking up. With the ever changing market and economic trends and conditions, house investors must always be prepared to make informed investment decisions to grow their real estate business, regardless of the season. Our advice to you is to study the market and keep up with the US housing market news and real estate blogs to capitalize on your investments and/or find the best investment properties, respective of any market conditions.
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