Are 2018 Predicted Real Estate Trends Coming to Fruition?

Anyone who was hoping that 2018 would be a calmer year than 2017 can set those hopes aside. While none of the predictions that housing experts made for the 2018 home buying market have been completely blown out of the water just yet, we’ve already experienced some unexpected twists that could affect how things turn out by the end. Here are some of the biggest predictions for house flipping in 2018 and where they stand right now:

• Tax reforms will affect the housing market, but no one knows how.

There was a lot of uncertainty at the start of the year as to how President Trump’s tax plan would affect the housing market. Now that the bill has passed both the House and the Senate, the consequences are starting to become clearer, but how individual buyers will be affected depends upon their economic bracket. For example, a new mortgage interest deduction on up to $750,000 in mortgage debt could discourage people at the high end of the market from selling, further tightening supply in the top markets. For a full breakdown of all the expected consequences, check out this article in Forbes.

• A strong national economy will contribute to increased home values.

Experts hope that this is still the case, and while the economy remains strong, it is also volatile. In February, the Dow dropped 3,200 points – which equates to 12% -- in just two weeks. At the time of writing, the Dow had two separate 1,000 point plus plunges this year. But the market also recovered quickly in both cases. While stock prices are still near record highs, there is a level of uncertainty in the market now that is prompting some experts to start using the scary term, “market correction.”

If a “correction” does indeed come, it could mean that home prices drop accordingly. But whether or not that happens remains to be seen.

• Millennials will overtake the housing market.

Millennials do seem to be the dominant force in the national housing market. They are rising to prominence at work, beginning to marry and have children en masse, and the result is more Millennials looking for starter homes. To all you house flippers out there, as you work with your private money lender and research prime neighborhoods, remember to take note of this all-important buying group.

Interestingly, Millennials are much more likely than previous generations to consider off-beat housing options. The rise of the tiny house, for example, is appealing to the Millennial generation in a way it probably never would have been to older folks. The abilities to leave a smaller carbon footprint, potentially be mobile, and spend substantially less than others on housing are all draws for buyers of tiny homes.

• Supply will finally meet demand.

Not yet. In January, home sales actually fell year-over-year, and the continually tight housing supply is being blamed as one of the main reasons. Another key reason for the drop is that prices are still out of reach for many first-time buyers. (Even rehabbers are feeling the pinch – more and more people are turning to house flipping loans to help them fund higher-end flips.) That said, by the end of the year, the housing shortage should begin to ease as new construction finally picks up, particularly construction of condos and townhomes.