For agents and brokers, 2018 could prove to be an interesting year, with spring buyers already seeming to be getting into the market before dwindling supply has a negative impact on prices.
According to a CNBC report, as demand gobbles up the few listings there are, prices are expected to edge upward, even in the lower end of the market.
According to the National Association of REALTORS®, buyers signed 0.5 percent more contracts to buy existing homes in December compared with November, according to its monthly pending home sales index. NAR Chief Economist Lawrence Yun said this was in line with expectations.
“Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now. Sadly, these positive indicators may not lead to a stronger sales pace. Buyers throughout the country continue to be hamstrung by record low supply levels that are pushing up prices – especially at the lower end of the market.”
For many agents are seeing increased activity from potential buyers, but weaker contracts.
This is backed up in recent statistics. . The number of buyers requesting house tours from real estate brokerage Redfin was up nearly 17 percent annually, according to its monthly demand report. Unfortunately, the number of potential buyers making offers dropped about 6 percent.
Redfin Chief Economist Nela Richardson said buyer demand is still strong, but wilted a bit in the face of low inventory.
“The housing market ended 2017 with 170,000 fewer listings than it had a year earlier. For the fourth consecutive year, inventory will be the major factor shaping the housing market in 2018.”
A key driver for the increase in prices in 2018 will continue to be low inventory.
Many agents are starting to see prices increase more quickly on the lower end of the market, where demand is strongest.
Moreover, millennial demand is on the rise as this demographic saw the largest jump in homeownership in 2017. Demand is expected to increase from them as their salaries and families grow.
Even new tax laws may not help. The best bet is new housing, according to Doug Duncan, chief economist at Fannie Mae.
“You may get some benefit from the tax bill if builders expand on the corporate side, but it is going to be offset by an increase in incomes for entry-level folks that will touch the demand side of the curve. We are not seeing a lot of shift in the supply-demand balance for next year making it tougher for entry-level borrowers.”
