Across the United States, lots of people are trying to decide whether to make that leap into homeownership this year. We decided to write up our thoughts on where the housing market stands today and what you should look for this year. Here is an overview of the top four things you need to know about the housing market in 2018.
1. U.S. Home Price Trends
It is been a good decade for home prices. After the housing market crash that began in 2008, we have seen a steady climb, with some markets rising more rapidly than others. Home prices have been rising about five to six percent per year on average for the past two years. While no one could predict the future, we think it is quite likely that home prices will continue to rise gradually in 2018. You need to keep in mind that gains of recent years have been higher than usual. If we take a look back over a longer period of time, home prices have generally appreciated at a rate of about three percent per year. The gains seen in recent years are definitely above the historical normalcy.
2. Changing Demographics. Supply and Demand
First time home buyer demand surged to its highest level in seventeen years during the third quarter of 2017. They accounted for forty percent of all single-family homes sold in the third quarter and fifty-six percent of all purchase mortgages financed, the report showed. The demand to buy a home has not diminished and has increased because of the sense of urgency from rental and home price inflation.
While most Millennials are approaching prime home buying age, increased supply of low down payment mortgage products have made it possible for first-time homebuyers’ to purchase a house.
The aftermath of the Great Recession brought new rules and a changing mood in the lending industry. Mortgage lenders scrapped the looser lending criteria that had prevailed in the run-up to the housing market crash and tightened their lending criteria. A home buyer’s credit score is one of the most important factors when it comes to qualifying for a loan these days. The lower utilization rate you have, the higher your credit score will be. First-time homebuyers ideally would have a lot of credit available, with less than a one-third of it used.
4. Mortgage Interest Rates
As the Federal Reserve continues to tighten monetary policy and implements the plan to reduce its balance sheet, most people expect mortgage rates to increase in this year. Find your debt-to-income ratio and factor in a down payment to get a good idea of what you could afford in regards to upfront and monthly payments.
Ultimately the decision to buy a house must depend upon your individual circumstances, including whether you are financially prepared to buy a property and whether you plan to own it for at least a few years.
Looking to buy a home in 2018? Click here to contact Kortney Williams for expert real estate advice today!