What real estate trends can we expect in 2018? It looks like good news for owners as home sales are expected to soar. However, the bad news is that buyers will need to be competitive as demand far exceeds supply.
Here are some tips from financial adviser Dave Ramsey to help you navigate the churning waters of the real estate industry this year (The Heat Continues: 2018 Real Estate Trends).
- Home sales are expected to remain hot through next year. According to NAR, the National Association of Realtors, the number of existing home purchases will rise to 5.8 million, an increase of 2.8%. As sales continue to rise it appears that buyers will have to re-think their must-haves. For example, commute time, neighborhood, price and size of home may require compromise to meet any competitive prices.
- Get your financing in order. Since most people are unable to pay 100% cash for their home, get pre-approved for a 15-year fixed-rate mortgage. Once sellers see that you already have the approval, they will know you are serious about the purchase.
- Save a competitive down payment. Although you might plan to put 10% down, a 20% down payment will make a stronger statement. It will look as though you are ready to buy! If you are buying your home with a spouse, Ramsey suggests you make a list of your wants and use that as a criterion for your search and present that list to your agent. That seems like a no-brainer, but once you’ve found those items in a home, you’ll be able to move faster with your purchase.
- Include a personal letter with your offer. If you enclose a letter saying what you love about the house, it will go a long way to improving your chances.
- Hire the best agent possible. That almost goes without saying, but, in a hot market, your agent can make the difference between making or breaking the deal. Since a home is your biggest investment, you want the best to help you can find.
- Home prices will rise slightly. According to the Home Buying Institute, 2018 home prices are expected to rise between 3% and 5%. As this is standard growth, home buyers need to evaluate the price they can actually afford. If your housing market is more expensive than you can afford, consider the following options:
- Save longer. While you might be debt-free, you may live in area where your income may not support your mortgage. In that case, you may opt to rent while you save more. Waiting just may be the right choice for you.
- Reset your expectations. You may have to consider giving up some of your must-haves. For example, do you really need a gourmet kitchen with breakfast bar or a den with built-ins? Look for the least expensive home in the neighborhood you love and consider upgrades at a later time.
- Broaden your search. Since home prices are usually higher the closer you are to a major city, try looking for a home further out but possibly close to a commuter line or public transportation that will get you to the city without a long drive. A great real estate agent will help you find the neighborhood most closely aligned with your needs and budget.
- Boomerang buyers will re-enter the housing market. As many as 10 million Americans were forced to foreclose on their homes during the housing crisis. After waiting the required seven years since the foreclosure, around 1.5 million Americans are now eligible to re-apply for home ownership, which bodes well for sellers – not so much for buyers.
- Hot markets will get hotter. Seattle, according to a recent real estate report, ranks number one among U.S. markets due to job opportunities, a diverse economy and a well-educated workforce. The other top 10 markets are Austin, Salt Lake City, Raleigh/Durham, Dallas/Fort Worth, Fort Lauderdale, Los Angeles, San Jose, Nashville and Boston.
The best way to chart a navigable path to your ideal home is with the help of a reliable, experienced, knowledgeable real estate agent.