Housing Outlook 2018: 6 Predictions From The Experts
In 2017 Americans learned to expect the unexpected, whether it be politics, weather or housing. Driven by record low inventory, little about the housing market went as forecast last year. “We thought there would be some things to take the pressure off,” reflects Skylar Olsen, senior economist at home search site Zillow. Interest rates would rise. Construction would pick up. Price growth would moderate. “That did not happen at any impactful level.”
Instead the market got hotter: inventory tightened, prices rose, mortgage rates barely budged and, though new home construction picked up at the end of the year, it was not at the starter price points where new inventory is needed most. Like the soaring stock market, the housing market often seemed disconnected from the tumult in Washington and natural disasters elsewhere. Observes Javier Vivas, director of economic research for Realtor.com: “We saw the economic growth and the economic momentum function as an override for a lot of external forces.”
With few clear signs of supply relief and the impact of the new tax law still being digested, reading the housing tea leaves is particularly challenging this year, but here are six things experts expect to happen:
1. The pace of sales will slow early in the year—but not for long.
Several provisions in the tax bill signed into law by President Trump last month will directly impact housing. These include changes to the mortgage interest deduction and to property tax deductions. Other changes will impact how much money people have, requiring decisions on how to spend it. Experts anticipate households will take some time to do the math on how the tax plan impacts them and the value of their home before making any big moves. Nevertheless underlying demand should remain strong after the best year for wage growth since the recession. Pent up demand from renters who have been unable to find suitable homes to buy also means the lid won’t stay on for long.
Read more on how the new tax law could impact housing here.
2. Inventory will continue to be a drag.
A crippling lack of inventory remained the defining trait of the housing market in 2017. At the start experts believed the crunch that characterized 2016 would bottom out; instead it grew worse. According to Zillow, housing inventory declined 10.5% in the 12 months ending in November. Data from brokerage Redfin shows that in November 2017 there were 653,347 homes for sale across the country. In November 2010 there were 967,604. Low inventory, says Olsen, “drove all the dynamics that we saw, from bidding war in the hottest U.S. housing markets, to the incredibly fast home value appreciation” across the country.
Looking to 2018, the general consensus is that inventory will pick up slightly. The biggest reason for this modest optimism is that the current situation is unsustainable. Prices cannot rise faster than wages forever. Plus, life events will eventually force reluctant sellers off the sidelines. Home search site Trulia found that 31% of Americans believe 2018 will be a better year then 2017 to sell a home, far more than the 14% who this it will be worse. (Though only 6% of homeowners say they plan to sell.) Another positive signal? New construction has started to swing away from apartments, typically built to rent, to single-family homes, which are built to own.
However, it has become clear that the typical assumption that demand and strong prices will entice construction are not holding true this cycle. There are structural reasons builders aren’t building: the high cost of land, skilled labor and building material, lack of buildable space and local regulations against density. Recently, however, builder sentiment has been brighter than consumer sentiment.
For a sign of how bad things have gotten, Nela Richardson, chief economist at Redfin, points to the aftermath of hurricanes and wildfires that wreaked havoc last year. Following those tragedies construction resources went to the places where it was needed most. This was necessary, but it “flat lined growth” elsewhere, says Richardson. Meanwhile, in the debate about the tax plan lawmakers indicated inventory woes are not top of mind, suggesting no policy relief on the horizon.
3. Price growth will slow—but not stop.
National home prices have climbed for 23 consecutive months. From January through October 2017 the Case-Shiller U.S. National Home Price Index increased 5.92%, on track for the biggest gains since 2013 when the market was finally recovering from the bust. The hottest markets last year were western cities like Seattle and Las Vegas where closing prices rose 12.7% and 10.2% respectively. Experts say prices will continue their march higher in 2018, but the rate of increases will slow. “Underlying the rising prices for both new and existing homes are low interest rates, low unemployment and continuing economic growth. Some of these favorable factors may shift in 2018,” noted David Blitzer, head of the Index Committee at S&P in the most recent release of the monthly reading.
4. The rent versus buy equation could tilt toward renting in costly markets.
Thanks to the new tax law, it just got more expensive to own a home in high tax and high price places. For some people the changes, combined with rising prices, may mean renting makes more financial sense than buying. “Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential home buyers compelled to look at renting” particularly in expensive West Coast cities, noted Blitzer.
“We begin 2018 with a frigid cloud of uncertainty surrounding the impact of the new tax bill that restricts State and Local tax deductions, both very high in states such as New York, New Jersey, Connecticut, California and Illinois,” noted Leonard Steinberg, president of brokerage Compass, in an e-mail with his quarterly report on the New York’s luxury market. “Will uncertainty lead the consumer to become a society of renters with diminished incentives to buy?” He thinks not.
Nevertheless, high rents and student debt loads have also made it difficult for young households to save up a down payment even if they can afford the monthly mortgage. Moreover, with prices rising so fast even a small increase in mortgage rates can put people over the edge on affordability. (Also read: Millennials Get A New Way To Clear The Down Payment Hurdle To Homeownership)
5. Mortgage rates will hover around 4%.
In December the Federal Reserve bumped short term interest rates 25 basis points to between 1.25% and 1.50%. Historically, movement from the Fed has had a corresponding effect on mortgage rates, but three hikes in 2017 and two in 2016 only moved the cost of a home loan slightly higher, casting doubt on just how much of a difference the three hikes Fed policy makers have projected for 2018 will have on housing.
Experts tend to agree mortgage rates will finish the year between 4% and 4.5%. That’s a touch higher than the rates for most of 2017 but still historically low. What they disagree on is how we’ll get there. Ralph McLaughlin, chief economist at Trulia, for example, expects a slow and steady rise. Greg McBride, chief financial analyst at Bankrate.com, anticipates volatility with rates “dipping below 4% at least once, spiking above 4.5% and closing the year around 4.5%.”
6. Millennial demand for housing will keep climbing.
After a decade of decline the homeownership rate finally ticked up in 2017. By the third quarter, 63.9% of households were occupied by owners--up from a low of 62.9% in the second quarter of 2016. McLaughlin says 2017 will be remembered as “the year the bleeding stopped and the healing started.” As Millennials age this trend is expected to continue. The generation of adults born after 1980 were slow to enter the housing market, but as a growing share of them get married and have kids they are buying homes at rates equal to their parents. In fact, single millennials are more likely to own a home than prior generations of singles.
Looking to buy a home, but don't quite have the down payment? There are ways to help save or get money towards your downpayment if you know what and who to ask. Learn more below:
5 Surprising (and Useful!) Ways to Save for a Down Payment
Buying your first home conjures up all kinds of warm and fuzzy emotions: pride, joy, contentment. But before you get to the good stuff, you’ve got to cobble together a down payment, a daunting sum if you follow the textbook advice to squirrel away 20% of a home’s cost.
Here are five creative ways to build your down-payment nest egg faster than you may have ever imagined.
1. Crowdsource Your Dream HomeYou may have heard of people using sites like Kickstarter to fund creative projects like short films and concert tours. Well, who says you can’t crowdsource your first home? Forget the traditional registry, the fine china, and the 16-speed blender. Use sites like Feather the Nest and Hatch My House to raise your down payment. Hatch My House says it’s helped Americans raise more than $2 million for down payments.
2. Ask the Seller to Help (Really!)When sellers want to a get a deal done quickly, they might be willing to assist buyers with the closing costs. Fewer closing costs = more money you can apply toward your deposit.
“They’re called seller concessions,” says Ray Rodriguez, regional mortgage sales manager for the New York metro area at TD Bank. Talk with your real estate agent. She might help you negotiate for something like 2% of the overall sales price in concessions to help with the closing costs.
There are limits on concessions depending on the type of mortgage you get. For FHA mortgages, the cap is 6% of the sale price. For Fannie Mae-guaranteed loans, the caps vary between 3% and 9%, depending on the ratio between how much you put down and the amount you finance. Individual banks have varying caps on concessions.
No matter where they net out, concessions must be part of the purchase contract.
Related: New Law Protects You from Surprise Closing Costs
3. Look into Government OptionsThe U.S. Department of Housing and Urban Development, or HUD, offers a number of homeownership programs, including assistance with down payment and closing costs. These are typically available for people who meet particular income or location requirements. HUD has a list of links by state that direct you to the appropriate page for information about your state.
HUD offers help based on profession as well. If you’re a law enforcement officer, firefighter, teacher, or EMT, you may be eligible under its Good Neighbor Next Door Sales Program for a 50% discount on a house’s HUD-appraised value in “revitalization areas.” Those areas are designated by Congress for homeownership opportunities. And if you qualify for an FHA-insured mortgage under this program, the down payment is only $100; you can even finance the closing costs.
For veterans, the VA will guarantee part of a home loan through commercial lenders. Often, there’s no down payment or private mortgage insurance required, and the program helps borrowers secure a competitive interest rate.
Some cities also offer homeownership help. “The city of Hartford has the HouseHartford Program that gives down payment assistance and closing cost assistance,” says Matthew Carbray, a certified financial planner with Ridgeline Financial Partners and Carbray Staunton Financial Planners in Avon, Conn. The program partners with lenders, real estate attorneys, and homebuyer counseling agencies and has helped 1,200 low-income families.
4. Check with Your EmployerEmployer Assisted Housing (EAH) programs help connect low- to moderate-income workers with down payment assistance through their employer. In Pennsylvania, if you work for a participating EAH employer, you can apply for a loan of up to $8,000 for down payment and closing cost assistance. The loan is interest-free and borrowers have 10 years to pay it back.
Washington University in St. Louis offers forgivable loans to qualified employees who want to purchase housing in specific city neighborhoods. University employees receive the lesser of 5% of the purchase price or $6,000 toward down payment or closing costs.
Ask the human resources or benefits personnel at your employer if the company is part of an EAH program.
5. Take Advantage of Special Lender ProgramsFinally, many lenders offer programs to help people buy a home with a small down payment. “I would say that the biggest misconception [of homebuying] is that you need 20% for the down payment of a house,” says Rodriguez. “There are a lot of programs out there that need a total of 3% or 3.5% down.”
FHA mortgages, for example, can require as little as 3.5%. But bear in mind that there are both upfront and monthly mortgage insurance payments. “The mortgage insurance could add another $300 to your monthly mortgage payment,” Rodriguez says.
Some lender programs go even further. TD Bank, for example, offers a 3% down payment with no mortgage insurance program, and other banks may have similar offerings. “Check with your regional bank,” Rodriguez says. “Maybe they have their own first-time buyer program.”
Not so daunting after all, is it? There’s actually a lot of help available to many first-time buyers who want to achieve their homeownership dreams. All you need to do is a little research — and start peeking at those home listings!
I don't usually post Zillow reviews, but this one meant a lot to me. We worked hard to make sure this home closed seamlessly and that my client had less stress on the plate during such a big move. I have experience with construction and have bought and remodeled personal properties as well as helped revamp client's properties. I am always happy to help and feel that a good job requires hard work from start to finish, no matter what that means. Each job is different, but each job requires the same level of attention to detail. Thank you again for this testimonial. You can see more reviews on the website www.BoulderHomeZone.com
5 Star Zillow Review: Recently, I moved from Colorado to the East coast for an Opportunity. A few years back Lou had helped me buy the perfect house. I was so impressed with his services, that I had recommended him to anyone I knew who were looking to buy or sell a house. And the people who I referred to Lou had only great things to say about him. Naturally, when I had to sell my house, I called Lou, and I’m so glad I did. My house was not very old, but after 11 years, it had a list of things that needed to be fixed. I was moving in a rush, there wasn’t time to fix everything, but Lou knew what the buyers would notice on showings and narrowed it down to a few items. These days, around the Denver area, it’s so hard to find the contractors that are reliable and are available within a few weeks. I’m anything but handy, so before putting the house on the market, Lou helped me power wash the front elevation, paint the patio, and fixed broken tiles on the yard. Once we got the house ready, it was listed and we got an offer within couple of days. I wanted to sell quick, so I was ready to accept it, but Lou had a strange feeling that the buyer had never toured the house personally. Guess what? Lou was right. Before accepting the offer, Lou wanted the seller or someone from his close family come and look at the house. Somehow, he made that happen. After the second showing, to the buyer who had already made the offer, Lou became reasonably confident that the offer was genuine; and only then he advised me to accept the offer. This yet another example of Lou doing the hard things to protect his client’s interest, instead of taking the easy way out. After the inspection, the buyer’s agent just forwarded the whole inspection list and wanted everything fixed. The list from home inspections are typically tedious with a lot of nit-picks, the buyer wanted them all fixed! Any seller would’ve rejected it and terminated the deal. However, I had already moved and had to sell the house, so Lou went to my house, verified every little detail on the list, discarded all the nit-picks, and came up with a few reasonable items that we should fix on the counter-proposal. Lou ‘s knowledge of construction was very helpful in the preparation of our counter offer. The buyer accepted it. Lou worked the phone with the contractors he trusted and got all the items fixed, payed them upfront out of his pocket and invoiced me; the costs were very reasonable. Finally, he couldn’t find someone to fix the fence post before closing, so once again, Lou fixed it himself, and didn’t charge me a dime. I had also left an old couch and few items that I didn’t want to take. Lou and one of his guys took care of it. My new job has kept me extremely busy, not a single free weekend for the past few months, without Lou’s help I would’ve lost my mind before closing; which I’m writing him a review on my first free weekend on the east-coast! By now you can tell Lou is my guy, that’s because I’m his most important client. Interestingly, that’s how all my referrals’ Lou, felt about him—he treated them as if they were his most important client.
01/01/2018 - arvin13
Sold a Single Family home in 2017 in McKay Landing, Broomfield, CO.
Rocky Mountain National Park is one of the great wonders of Colorado. You can get lost for days camping in the park or visit for one day and enjoy magnificent hikes and wildlife! Many people travel to the National Park for vacation, but if you live in the state, you are lucky enough to enjoy all that the park has to offer year round. So, why not plan a day trip to explore 415 square miles of trails, wildlife, wildflowers and more.
Visit Rocky Mountain to learn more and plan your winter or summer excursion.
What's Popular Now in Rocky Mountain?
Winter is a spectacular time to visit the wilderness of Rocky Mountain National Park. With a little bit of preparation, many exciting activities await you. Be sure to layer up with insulating, waterproof clothing, wear sunglasses, use sunscreen and carry water.
Learn and Explore
Avalanche, Snow, and Trail ConditionsRocky's avalanche risk, snow levels, and trail conditions are always changing. Read the current avalanche forecast, see how much snow is on the ground, and view trail condition reports by following these links.
Ever thought how fun it would be to hike in the winter, but there's all that snow? Consider snowshoeing! It's as easy as strapping snowshoes on your boots and grabbing a couple of poles. No training is necessary and if you can hike, you can snowshoe. Most park trails can be explored with snowshoes. A few pieces of equipment are essential: you will need a pair of snowshoes and waterproof boots. Poles are helpful for maintaining balance, but optional. Waterproof pants or gaiters help keep you warm and dry.
Picture yourself gliding through a silent forest full of fresh, white snow. Cross-country skiing is a rejuvenating sport that pairs physical exercise with the beauty of nature. You will need skis and poles with large baskets. Waterproof pants or gaiters help keep you warm and dry. In general, terrain and deeper snows on the west side of the park make for better for cross-country skiing, but you are welcome to strap on your skis throughout the park.
Hidden Valley is the one place in Rocky where sledding is allowed. No tows are provided, and you must provide your own plastic sled (sleds with metal runners are NOT allowed), saucer, or tube (if you don't bring your own they may be rented in Estes Park at most any outdoor shop). You walk your sled/saucer/tube up the hill and slide down. It's a pretty gentle hill, being the bottom of the bunny slope of the former Hidden Valley Ski Area. Skiers, snow boarders, and snowshoers may pass but must use caution around sledders, and slow down to yield the right-of-way. A restroom (flush/running water) is at the bottom of the hill by the parking lot. On most weekends when there's an attendant, a warming room is also available. Winter winds can scour the area, causing conditions to vary, so call the park Information Office for the latest information, 970-586-1206.
Snowshoe with a Ranger
Check the Free Ranger-Led Programs for snowshoe opportunities with a ranger; reservations are required. Snowshoe walks are offered on both sides of the park from January through March, depending on conditions.
What if I don't have my own equipment?
The communities of Estes Park and Grand Lake have shops where winter recreation equipment, including snowshoes, cross-country skis, poles, boots, sleds, tubes, saucers, gaiters, stabilizers can be rented or purchased. For renting equipment in Estes Park see the Visit Estes Park website. For rentals in Grand Lake and the surrounding area, see the Visit Grand County website.
Many park roads are open in winter to provide access to the wintry world park wildlife call home. Winter is an especially good time to look for elk, mule deer, moose, and other large mammals. Look for moose along the Colorado River on the park's west side. Elk and mule deer are most active at dusk and dawn, and are usually seen in meadow areas. Look for bighorn sheep along the Highway 34/Fall River corridor on the park's east side. Coyotes may be seen any time of day. Members of the Jay family, including Steller's jays, with their striking blue bodies and crested heads, gray jays, Clark's nutcrackers, and the iridescent, long-tailed black-billed magpies are commonly seen in the park.
Last summer, Boulder introduced a new type of dining, mingling and entertaining to the North Boulder area. Rayback Collective is a casual place to wind down with friends or family. It is "a food park. A bar. An event space." So, whether you want to grab a quick drink, a quick bite or listen to music outside and do a little yoga, check out Rayback Collective. It's also a great place to host an office party or other special occasion!
On the corner of Valmont and 28th, Rayback Collective begins with an event space that leads to the bar, a lounge and the stage. Outside you will find a fire pit, a handful of food trucks, the porch and the yard.
Visit the Calendar, to find a list of daily food trucks, music film and community events such as yoga.
Growler USA is a popular microbrew pub all over America. And now, it is in downtown Louisville. Beginning in Eugene, Oregon, Growler USA had the image of becoming a "national American craft beer pub for all to enjoy." The pub takes traditional beers and innovates them with unique flavors pallets and never misses a beat on creativity. The name comes from the growler vessel that was used to transport beer and, more recently, used to bring beer home from the pub.
Growler USA Louisville Location
Come enjoy the best local and regional craft beers at Louisville’s newest neighborhood pub. Some you’ll know; others you’ll come to love. Enjoy craft cuisine and hand crafted beverages in a comfortable setting. Make yourself at home…only with a much, much larger beer selection. Did we mention 100 taps? And craft beer?
And wine. And ciders. And flavored kombucha teas, cold-pressed coffee, and more. We’re all about comfort and yumminess. Is that a word? It should be.
Can we hear each other talk? Yes. Is the game on? Yes. Do you do the types of things, like Tap Takeovers, that make the American craft beer scene so fun and endearing? Oh, heck yes.
Lunch. Dinner. Drinks. Everything in between. Come on in for a bite and a beverage. Let’s make it a regular thing.
A sampling of the menu includes:
Baked Philly Pretzels
Buffalo Chicken Dip
Pilsner Chicken Cobb
Growler Chili Cheeseburger
Pilsner Chicken Avocado Club
Beer Cheese Soup
I am a real estate professional, serving Boulder and Denver, Colorado. My extensive knowledge of the market, coupled with my commitment to provide extraordinary service, has resulted in hundreds of successful transactions. Let me help you buy or sell your home.