Our bold housing predictions for 2018 say the future’s bright.
In the mortgage business, things never stay the same for too long. It’s a cyclical industry and that’s why we’re always keeping tabs on what’s happening and letting you know what may be coming next. Last year was interesting to say the least. If we could sum it up in one word: growth. Interest rates, home prices, and the rate of homeownership all increased. This month, it’s the start of a new year, and we’re making three bold housing predictions for 2018 (you might be surprised at number two).
Home prices will rise
It’s the current “inventory crisis” that’s got everyone talking. Since the number of homes for sale is low, competition is high, and sellers are taking advantage of their chance to post higher asking prices. And, if interest rates continue to increase (as they steadily did in 2017) we’re looking at a tough market for home buyers in 2018, especially for first-timers. Some sources may predict home price growth will slow down, but we’re predicting a slight uptick. Needless to say, one of our bold housing predictions for 2018 is that housing will become less affordable for would-be home buyers.
If interest rates continue to increase (as they steadily did in 2017) we’re looking at a tough market for home buyers in 2018, especially for first-timers.
For those of you who made a New Year’s resolution to buy a home this year, if this prediction comes true, it might make the jump from renting to owning more difficult. Beyond that, you’re competing against experienced buyers who have at least one successful home sale under their belts and are well-versed in the art of negotiation. But even experienced buyers might avoid the market in 2018…
Homeowners will remodel, not sell
Due to rising home prices—coupled with low housing inventory and the possibility of interest rates rising even more—we’re predicting a lot of current homeowners who are due for an upgrade will stay put instead. Let’s say you bought your home seven years ago and you’re getting serious about buying a new home this year. Maybe you’re upsizing, downsizing, or you’re looking to move out of the city and into the suburbs. Whatever your motivation, we like to call homeowners like you “rebound buyers” because you’re re-entering the market.
Another one of our 2018 housing predictions is that, rather than jumping into today’s tough landscape and competing with other buyers over high home prices, these homeowners will stay in place and opt for renovations. But that doesn’t mean they don’t need a mortgage! These homeowners might take out a HELOC or cash-out refinance to help fund the cost of making their current digs feel more like new.
We’re predicting a lot of current homeowners who are due for an upgrade will stay put instead.
More assistance programs will launch
Last year was big in the way of homeownership assistance. In 2017, we saw more mortgage lenders adopt new down payment assistance (DPA) programs, lower their minimum credit score requirements, and lower their down payment minimums. Last June, Fannie Mae raised their debt-to-income ceiling from 45% to 50%, making homeownership possible for many more Americans who have debt. Where a high DTI keeps people from qualifying for a mortgage, this ceiling increase helps many more become eligible.
Fannie Mae and Freddie Mac also raised their conforming loan limits from $424,100 to $453,100 for single-family residential loans closed after January 1, 2018—which means home buyers looking to purchase a high-priced home may not have to take out Jumbo loan financing. This will allow more home buyers who either don’t qualify for a Jumbo loan or simply don’t want to deal with the hassle of a strict Jumbo loan process to get that dream home. We’re predicting this loan limit increase will be huge for home buyers in 2018 seeing as we’re also predicting home prices will continue to rise.
These are just a few of the changes to the mortgage industry that are making homeownership more affordable for many Americans. And one of our bold housing predictions for 2018 is that advancements like these will only continue!
Do you have any bold housing predictions for 2018? Tell us on any one of our social media channels or tag #Cardinal2018Predictions!
