For real estate agents and brokers looking for game-changers for their business in 2018, there are several potential shifts that could provide that needed jump-start or help you take your business to the next level.
In 2017, many markets have struggled with inventory and price appreciation. We also have seen generational changes as millennials have started to come into their own.
According to Realtor.com, supply many finally catch up with demand in 2018, shifting many markets into another gear.
“The majority of the year should be challenging for most buyers, but we do expect growth in inventory starting in the fall,” noted Danielle Hale, chief economist for realtor.com.
That’s a potentially transformative development for many would-be buyers who’ve been frustrated in their search for a home that meets their needs—and their budget.
“Once we start to see inventory turn around, there is plenty of demand in the market,” Hale says.
Realtor.com data signals that inventory may remain tight in the first quarter of the year, reaching a 4 percent year-over-year decline in March, if it increases as predicted by fall, that will be the first net inventory gain since 2015.
Key markets such as Detroit, Nashville and Boston, could see their inventories bounce back first.
But those itching to buy a starter home may have to be patient for a while longer.
“We expect the relief to start in the upper tiers, and it will make its way down to the lower tiers,” Hale said. Specifically, most of the initial inventory growth will be in the mid- and upper-tier price ranges, $350,000 and up.
As the market eases, home prices are expected to slow to 3.2 percent growth year-over-year nationally.
Senior Economist Oscar Wei from the California Association of Realtors (CAR) said economic growth should continue to grow for the next couple more.
“Even though the housing market is doing okay now, sales growth is beginning to visibly slow in California due to affordability and supply issues,” he said, adding that while interest rates are still low they should rise in 2018.
Moreover, Hale and Realtor.com noted that as millennials come into their own, it could provide a second game-changer for the real estate market.
“They’re at that point where they’re seeing their incomes grow, and that will help them take on bigger mortgages,” Hale says. That’s because of both the overall strong economy and their own career development.
Wei says greater numbers of millennials and other first-time buyers are entering the housing market for the first time and that household growth rates continue to support housing demand. While sales are improving in mid and high priced segments they are declining at the lower price points due to dwindling supply.
Millennials could make up 43 percent of home buyers taking out a mortgage by the end of 2018, up from an estimated 40 percent in 2017, based on mortgage originations.
Despite weather impacting the market, homes in the South will continue to be in demand, setting the stage for a third game-changer.
Cities like Dallas, Charlotte, Little Rock and Tulsa are now on the radar, where growth of 6 percent or more is possible in 2018, exceeding the national average of 2.5 percent.
“Even compared with the rest of the country, the Dallas market has had a really strong economy,” Hale said. “Dallas recovered a bit faster than the rest of the country with a below average unemployment rate, which is a strong place to be today.”
A final game-changer may or may not be tax reform.
The Republican Party’s proposed changes to the tax system could change everything—but with both the House and Senate versions in limbo, the jury is still out on this one.
The National Association of Realtors has predicted the bill could cause housing prices to drop in every state. This creates a potential game-changer every agent and broker should keep a close eye on in 2018.