The 2017 real estate market will finish strong with existing-home sales at 5.47 million, a 0.4 percent year-over-year increase from 2016. For 2018, the increase should increase from 3.7 percent to 5.67 million. The national median existing-home price is predicted to rise to around 5.5 percent in 2018. The average home price climbed to $199,616 in 2017 compared to $194,086 in 2016 and increase of 2.86%.
Some of the same predictions for 2017 will continue true in 2018. Inventory is low; interest rates remain low; the average price of property, in general continues to rise and the economy appears to be strong.
There is a shortage in inventory and this will continue to push up home prices. There are 12 percent fewer homes to select from nationwide and many homes for sale are out of the price range for first-time buyers. Some of the economists predict that this shortfall will ease up in the second half of 2018. Entry-level homes will continue to see price gains due to the larger number of buyers that can afford them and more limited homes available for sale in this price range.
New construction will rise and many of those homes will be starter homes. Economists are predicting 1.33 million new housing starts in 2018 – up from 1.22 million in 2017.
Millennials are a key factor to consider. With the great recession and college student loan debt, millennials are behind a few years in making a home purchase. Many millennials will move to the suburbs and away from renting in the urban centers. They may prefer urban area with entertainment and shopping options; however, they will not be able to afford housing in those areas. Millennials seem to be having more ability at taking out mortgages on homes at varying prices and not just starter homes. They are seeing an increase in income and even though they may have large student debt, they can take on larger mortgages partly because of the overall strong economy and their career development. Millennials could reach 43 percent of home buyers taking out a mortgage by the end of 2018 which is up from 40 percent in 2017.
With the housing shortage, some homeowners will consider remodeling their home to make their current home feel and look brand new.
Homeowners that lost their home during the recession will be rebounding back. Normally, foreclosure wait period is seven years. They are close to being able to purchase a home again.
U.S. economic growth is positive with the stock market going strong with a rise of 10% in 2017. Mortgage rates averaged in October 2017 3.94% for a fixed rate loan compared to 3.51% October 2016. Mortgage rates will increase somewhat and predicted to reach 5% by the end of 2018 due to stronger economic growth, inflationary pressure, and monetary policy normalization.
Home prices will continue to grow but at a slower pace than in 2017. In 2018, the home prices are expected to climb to 4.1 percent which is 1.1 percentage points higher than the “normal” annual appreciation but slower than the current annual pace of 6.9 percent.
Locally in the Cincinnati/Northern Kentucky market, are economy has been strong. Greater Cincinnati’s $132 billion economy has not only surpassed Columbus as Ohio’s largest, it is the fastest-growing major city in the Midwest.
The median home value in Cincinnati is $127,000. Cincinnati home values have gone up 6.8% over the past year and Zillow predicts they will rise 3.1% within the next year. The median home value in Kentucky is $136,500. Kentucky home values have gone up 4.2% over the past year and Zillow predicts they will rise 3.2% within the next year.
I always enjoy looking back over the last year and determine what the next year holds. Real Estate is exciting and it looks like we will have another good year!
For more information on how Ziegler & Schneider, PSC can assist you with all of your Real Estate needs, please contact Catherine D. Stavros at (859) 426-1300.