What are the Real Estate Market Expectations for Next Year?

What are the Real Estate Market Expectations for Next Year?


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In the US, it’s impossible to talk about the expectations in the real estate market without mentioning the Trump effect. The president is expected to usher in a number of policies that could vastly change the trajectory of the property market. The policies include tax cuts, infrastructure expenditure, and immigration legislation. The property market in 2018 is going to be driven by the policies, and so will be the case next year and the year after. Before, the market was described as ‘neutral’ due to little political intervention.

What is evident in the industry is the perpetual drop in new constructions. One reason that explains the drop is employee shortages. Statistics show that one in every four workers in the construction industry is a foreigner. Typically, the strict immigration policies will affect the industry significantly. Unless something is done, the number of new constructions will continue to decline. Judging by the current state of the real estate industry, experts predict the following three indicators for next year’s real estate.

1. Slow but Continual Market Growth

In America, a majority of homes are built under affordable terms. Basically, individuals of average income will find it easy to procure property, mostly on mortgage terms. From now to next year, it’s projected that the industry will grow, though at a slow pace. The slow growth rate is attributed to low constructions, and as mentioned earlier, this is due to the strict immigration policies by the state. On a positive note, the real estate will recover slightly between this year and next year to about 1.7% growth rate. This will be a massive gain considering that the rate in 2016 had dropped by 3.4%.

2. Next year’s Real Estate Market will Be the Fastest on Record

Well, this is not with respect to new construction volumes but in relation to the existing properties. Analysts project that the home sales will rise by 5.3%. In 2016, the rates were 3.4%, and there was no significant change the year after. The explanation is that next year, homes will be spending few days on the market before they are bought. Since the numbers of new constructions are greatly dropping, there will be an increased demand for the few available houses. Therefore, buyers will be fighting for the properties that are available.

3. Though not by Much, Mortgage Interests will Rise

Experts expect that the mortgage rates for long-term homes will increase to about 4.3% by next year. For example, a 30-year mortgage property demanded an interest of about 3.5% last year. This year, the rate will rise to 4%, and consumers should expect to pay more next year. The good thing is that people will have access to flexible home loans. This is great for individuals with better credit records.

Bottom-line

In the midst of growth in the real estate market, we should expect housing shortages. The shortage process is perpetual and has been consistent since the inauguration of the new US regime. The smartest investors are buying properties now so as to reap big next year and the years after.

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