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What trends could emerge in the 2018 housing market?

December 13, 2017

There have been plenty of ups and downs in the housing market over the past several months, and industry experts believe that trend should continue into 2018. That, in turn, makes it a little more difficult than normal to predict how the market will change in the year ahead.

"25% think 2018 will be better for buyers."

For now, one thing is certain: Buyers, who have long dealt with intense competition and rapidly rising home prices, are a little more dour about their chances to lock in a good deal compared with what was available to them in 2017, according to a new survey from Trulia. Only 25 percent of respondents said they think 2018 will be a better year for buyers than 2017, and 50 percent feel things will be about the same.

The responses marked the first time since 2014 that would-be buyers mostly saw the year ahead as less encouraging, and as such, only about 1 in 10 Americans have designs on making a home purchase in the year ahead.

Few sellers in the market
At the same time as shoppers think they might run into more difficulty, 31 percent of respondents also think 2018 will be a better year for sellers, more than doubling the 14 percent who see a worse future for current owners looking to sell, the report said. This difference represented the second-largest lead for positive sentiment seen since 2014, but unfortunately for shoppers, only 6 percent of owners plan to sell in the year to come, which will likely put more of a crunch on the current inventory problem.

"Economic uncertainty that could prompt notable changes."

Up in the air
However, there's significant economic uncertainty that could prompt notable changes, according to Redfin. For instance, buyers and sellers alike may soon start leaving states with high tax rates if federal tax reform passes in its current form, because they would not be able to write off many state and local taxes on their federal filings.

This trend might also lead more owners to stay in their current residences, though, because homeowners are currently allowed to exclude hundreds of thousands of dollars from home sales from their capital gains income if they've been in their homes for five years, the report said. The new tax bill, which has yet to pass, could increase that length of time to eight years, meaning more people may need to spend three additional years in their current homes.

Nonetheless, there is an expectation that first-time homebuyers will push demand despite these concerns, and could continue to prop up sales numbers throughout 2018, according to Inman. This may be particularly true when it comes to markets where prices are notably lower than in major cities or their surrounding suburbs.

In many ways, then, it seems the 2018 housing market will be very similar to 2017's iteration, though the uncertainty of the tax bill could certainly throw a monkey wrench into various aspects of a broader housing and economic recovery.




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